Recognizing the Need to Cut Corporate Income Taxes
In this past session, the Missouri Legislature addressed several important policy areas. At the Show-Me Institute’s latest Policy Breakfast, Senators Bob Onder and Joseph Keaveny discussed items that the legislature approved, such as one bill that would limit traffic fines as a source of revenue for municipalities. However, the senators also discussed items that the legislature did not pass, including improvements to government transparency and funding for the Missouri Department of Transportation (MoDOT).
I was particularly pleased to hear (and not just because I was mentioned by name) Sen. Onder’s desire to rein in the state’s overly generous economic development tax credit system. Sen. Onder is right that we can completely eliminate the corporate income tax if we scaled back on the issuance of economic development tax credits in this state. Just last year, Missouri issued close to $370 million in economic development tax credits while it collected only $337 million in corporate income tax revenue.
Considering that these economic development tax credits have been found in some cases to be seriously flawed and in many cases return just cents on the dollar to taxpayers, it makes sense to cut back on issuing them and instead zero-out one of the most economically damaging taxes a state can impose. I am glad there is at least some desire to reform our tax credit system in Missouri, and I hope the legislature can address this problem next session.