Michael Rathbone
Kentucky, known world-wide for its horse races, is trying to keep pace with Kansas as it gallops toward an economically competitive tax code. Meanwhile, it looks like Missouri will not even Show. Kentucky is also looking into fundamentally overhauling its tax structure. Just recently, Kentucky Gov. Steve Beshear's Blue Ribbon Commission on Tax Reform accepted a report detailing several ways the state can overhaul its tax code. Some of the specific recommendations are debatable, but it is not the specific policy points so much as the core ideas on which these recommendations are based that I want to highlight. According to reports:
". . . broadening the tax base will make the system more elastic; and shifting taxation away from business capital and labor earnings and toward consumption will make it more competitive . . ."

These are ideas that the Show-Me Institute has supported, including replacing the personal income tax with an expanded sales tax along with support for eliminating the corporate income tax.

Now, I am not saying that Kentucky will be overhauling its tax system tomorrow. Government commissions such as these have a tendency of not going anywhere (see Missouri's Tax Credit Review Commission). However, Kansas recently cut its income tax. Both Nebraska and Oklahoma are looking to seriously overhaul their tax codes so one can forgive me if the fact that Kentucky now is considering tax reform makes me a bit nervous.

Missouri does not exist in a vacuum. What others states do has an effect on it. If other states scramble to cut or even do away with their personal income tax, what do you think that will do to Missouri's economic prospects? Missouri needs to take bold steps to reform its tax code. If Missouri fails to act, it will fall farther behind.

About the Author

Michael Rathbone
Policy Researcher
Michael Rathbone was a policy researcher at the Show-Me Institute. He is a native of Saint Louis and a 2008 graduate of Saint Louis University, where he earned a bachelor of science degree in biomedical engineering.