A Golden Opportunity
Now that there are veto-proof Republican majorities in the state legislature, lawmakers have the opportunity to enact real, substantive changes to Missouri public policy. Show-Me Institute Policy Analyst Patrick Ishmael commented on some things that he would like to see and I want to comment further on items that the legislature should consider.
Missouri is lagging behind economically compared to other states. The state should avoid development schemes such as Aerotropolis and instead focus on other means of boosting the state’s economic competitiveness, such as tax reform.
Oklahoma is looking to enact major tax reform with an eye toward eliminating the state’s income tax. That is a worthy long-term goal and it is an issue that the Show-Me Institute has studied in the past. In the nearer term, the state should focus on eliminating the income tax on c-corps and pass-through entities. Pass-through entities are businesses whose income is taxed at the individual level instead of the company level. Many small businesses and professional corporations, such as a dental practice, are pass-through entities. Kansas got the drop on us when it eliminated its tax on pass-through entities. Missouri can do one better if both the corporate income tax and the tax on pass-through entities are eliminated.
There have been a couple of attempts to reform the corporate income tax. Missouri Sen. Will Kraus (R-Dist. 8) proposed a bill that would have modified certain tax credits and used the increased revenue to offset the corporate income tax. The Missouri House passed a corporate tax cut in 2011. Unfortunately, these attempts did not go any further. However, the legislature can still move forward, especially now that there is a veto-proof majority. Policy changes that Missouri’s neighbors have enacted have made change more necessary.