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State and Local Government / Transparency

Tax Credit Review Commission Delivers Final Recommendations; Expect No Surprises

By Christine Harbin on Nov 16, 2010

The subcommittees on the Tax Credit Review Commission are delivering their final recommendations. From an article by the Missouri Watchdog:

The tax credit commission will not come back with any sweeping generalizations about the 61-different tax credit programs in Missouri, [co-chair] Gross said.

“Some programs have out lived their useful life… and some have sunsets we will allow to sunset. Those are not going to be controversial,” he said.

Although this is disappointing, it is not surprising. Back in June, I predicted that there would not be calls for scaling back these programs. This is largely attributable to the composition of the commission. It includes businessmen whose companies have been issued tax credits, along with bureaucrats and politicians who have an incentive to grow the size of government.

This was a missed opportunity to reform the economic development strategy in Missouri. It is very likely that targeted tax credit programs are a contributing factor to the state’s budget problems, and the commission should have evaluated their effectiveness in general. True economic reform in Missouri will require a high-level, macroeconomic cost-benefit analysis. Without any reform, Missourians would experience a continuation of the status quo.

The ostensible purpose for the Commission, as Gov. Jay Nixon outlined in his opening remarks, was threefold: help the state make wise use of taxpayers’ dollars to create jobs, incite economic development, and build strong communities. Instead of assuming that tax credit programs are the best means of achieving these goals, the commission should have investigated whether there are other tools that achieve these goals better.

Instead, the commission will deliver recommendations that will not actually do anything to limit the number of tax credits issued in Missouri — it will instead maintain the status quo.

The state economy is not without problems. When the state government says that it will investigate reform, it should engage in a serious effort, rather than mere political posturing.

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Christine Harbin

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