• Publications
    • Essay
    • Case Study
    • Policy Study
    • Report
    • Testimony
    • Other
    • Newsletter
  • Blog
    • Daily Blog
    • Podcasts and Radio
    • Video
    • Infographics
    • Commentary / Op-Eds
    • Events
  • Events
  • Donate
  • About
    • Our Team
    • Show-Me Institute Board of Directors
    • Fellows and Scholars
    • Our Authors
    • Jobs
  • Contact
  • Explore Topics
    • Education
      • Accountability
      • Education Finance
      • Performance
      • School Choice
    • Health Care
      • Free-Market Reform
      • Medicaid
    • Corporate Welfare
      • Special Taxing Districts
      • Subsidies
      • Tax Credits
    • Labor
      • Government Unions
      • Public Pensions
    • State and Local Government
      • Budget and Spending
      • Courts
      • Criminal Justice
      • Municipal Policy
      • Property Rights
      • Transparency
      • Transportation
    • Economy
      • Business Climate
      • Energy
      • Minimum Wage
      • Privatization
      • Regulation
      • Taxes
      • Welfare
      • Workforce
Show Me InstituteShow Me Institute
Show Me InstituteShow Me Institute
Support the Show-Me Institute
  • Publications
    • Essay
    • Case Study
    • Policy Study
    • Report
    • Testimony
    • Other
    • Newsletter
  • Blog
    • Daily Blog
    • Podcasts and Radio
    • Video
    • Infographics
    • Commentary / Op-Eds
    • Events
  • Events
  • Donate
  • About
    • Our Team
    • Show-Me Institute Board of Directors
    • Fellows and Scholars
    • Our Authors
    • Jobs
  • Contact
  • Explore Topics
    • Education
      • Accountability
      • Education Finance
      • Performance
      • School Choice
    • Health Care
      • Free-Market Reform
      • Medicaid
    • Corporate Welfare
      • Special Taxing Districts
      • Subsidies
      • Tax Credits
    • Labor
      • Government Unions
      • Public Pensions
    • State and Local Government
      • Budget and Spending
      • Courts
      • Criminal Justice
      • Municipal Policy
      • Property Rights
      • Transparency
      • Transportation
    • Economy
      • Business Climate
      • Energy
      • Minimum Wage
      • Privatization
      • Regulation
      • Taxes
      • Welfare
      • Workforce
Economy / Taxes

Tax Rates DO Matter

By Michael Rathbone on Dec 19, 2012

Driving to work today, I was listening to 101Espn (the station I listen to when I am not listening to Show-Me Institute Policy Analyst David Stokes on McGraw) and heard an ad about the tax advantages of buying cars in Illinois versus Missouri. The ad even urged the listeners to go online and check the tax savings available if they buy their new car in Illinois.

This ad exists because of a loophole allowing Missouri drivers to buy cars out-of-state without paying a local sales tax.  Now, I am not really a fan of tax loopholes. My displeasure borders on rage. However, the key point here is that taxes affect people’s decisions. We have seen that low excise taxes on gas, cigarettes, and alcohol in Missouri encourage people to buy these products in Missouri.

If it is worth buying ads to promote the fact that you will not pay a local sales tax if you buy a car in Illinois, then the tax advantages of moving an entire business to a new jurisdiction can be even more pronounced. That is why the Kansas tax cuts matter. By eliminating its tax on pass-through entities, Kansas made itself more attractive to businesses looking to gain any advantage it can in a competitive marketplace.

Missouri does not have to stand idly by while its neighbors continue to make themselves more attractive to businesses. In a forthcoming essay, Patrick Ishmael and I lay out the need for the state to eliminate the tax on pass-through entities.

A zero local sales tax liability matters so much that a car dealership believes that it is worth purchasing ads. How much are competitive tax rates worth to the entire state? If Missouri wants to compete, it should have a tax structure that allows it to do so.

  • Share
  • Tweet
  • Share
  • Email
  • Print
About the author

Michael Rathbone

More about this author >
    Footer Logo
    Support the Show-Me-Institute
    Showmeinstitute.org is brought to you by Show-Me Institute and Show-Me Opportunity.
    • Publications
    • Blog
    • Events
    • Donate
    • About
    • Contact

    Reprint permission for Show-Me Institute publications and commentaries is hereby granted, provided that proper credit is given to the author. We request, but do not require, that those who reprint our material notify us of publication for our records: [email protected]

    Mission Statement
    Advancing liberty with responsibility by promoting market solutions for Missouri public policy.

    © Copyright 2023 All Rights Reserved