We’re Not in Kansas Anymore
On Wednesday, June 1, the Kansas City Star reported that Applebee’s will receive tax breaks to move its headquarters from Kansas to Missouri. For those of you who aren’t familiar with the area, this particular move will involve a distance of less than 15 miles. Our Department of Economic Development (DED) has agreed to award $12.5 million dollars in tax breaks for this move. Is it really worth that price?
Missouri’s economic development officials claim that the tax breaks will create a net gain for the state. According to the best estimate I could come up with, the state can only expect to receive a total of $838,000 over 10 years. And, starting with a figure provided by Applebee’s itself, a second estimate predicts a loss of $1.1 million.
Why is the state choosing to award Applebee’s? Why not lower the tax burden across the state by $12.5 million? And what of Applebee’s competitors? Are they receiving a tax break? Will the subsidy allow Applebee’s to outcompete other companies? If the answer is yes, we must ask ourselves if the state should be the one picking winners and losers in the economy.
It is perplexing that the DED is awarding millions of dollars to move a company 15 miles across the state border. Clearly, this does not improve the Missouri-Kansas economy; it merely helps an individual company. Again, why Applebee’s? Why not spread the millions in aid across the entire state of Missouri in the form of lower taxes?
Even if it weren’t for the fact that the state is taking a huge risk by awarding a tax break to Applebee’s, we all need to wonder why the state doesn’t instead simply lower the tax rate for everyone.