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State and Local Government / Transparency

Targeted Tax Credits Rear Their Ugly Head in the Missouri Legislature Again

By Christine Harbin on Jan 5, 2010

As Steve Walsh explains in an article on Missourinet, this time the industry targeted for tax credits is data centers.

From the article, we can see that support for this policy comes from those who would benefit most (i.e., rent-seeking behavior):

The push for the legislation comes from what is known as the Missouri Coalition for Data Centers, which is made up of businesses and local economic development agencies.

For reasons I’ve explained before on this very blog, targeted tax credits aren’t good policy. I’m beginning to feel like a broken record here!

Missouri should stop using targeted tax credits as an economic development policy, and instead let the free market decide which economic activities take place inside state borders. Officials should focus on creating tax policies that don’t favor one kind of business over another, such as reducing commercial property tax surcharges or corporate income taxes.

If other states decide to spend tax money to attract specific industries, be it filmmakers or data management centers, then Missouri shouldn’t feel the need to imitate them. To paraphrase Josh Smith’s comments on my recent post about tax credits to filmmakers, this is particularly true when Missourians: (1) are still able to get the benefits of the product by paying to receive the data management service; and, (2) don’t have to spend their tax money to entice the data management companies to locate here, resulting in a few obvious benefits.

Link via John Combest.

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Christine Harbin

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