Agricultural Tax Credits Are Still a Bad Deal

Posted on August 30, 2022January 13, 2026 by Elias Tsapelas

Last week, Governor Parson called a special session of the Missouri Legislature to pass the “largest tax cut in state history.” In addition, the governor called for the extension and creation of eleven agricultural tax credit programs. While my colleagues and I have written a lot about the benefits of lowering the state’s income tax, we’ve also written about how bad of a deal these agricultural tax credits—like almost all tax subsidies—have historically been for Missourians.

Missouri’s already one of the national leaders in sacrificing state tax dollars for private economic development interests. Over the past decade, our state has devoted nearly $6 billion to tax credits with little to show for it. That’s also why my colleague David cheered when four of the tax credits listed below were allowed to expire last year. But now that the state has a surplus of revenue as a result of a better-than-expected economy (in the year these tax credits were not active), it’s apparently time to bring them back.

I’m not disputing that rural parts of the state would benefit from greater investment. But state tax credit programs are clearly not the way to do it. Government officials cannot predict the future, nor should they be in the business of picking winners and losers, which is something I thought Governor Parson agreed with. When the governor vetoed the tax rebate bill that spurred this special session call, he criticized the legislature’s decision to approve one-time tax benefits for some, instead of favoring permanent tax relief for all Missourians. The governor was correct then. So why is he now supporting tax credits paid for by so many to benefit so few? Here is a list of the tax credit programs being considered in the special session, and how many (actually, how few) entities used each program in the last year credits were issued:

Wood Energy Tax Credit – 8
Meat Processing Facility Investment Tax Credit – 13
Ethanol Tax Credit – NEW
Biodiesel Retail Sellers Tax Credit – NEW
Biodiesel Producer Tax Credit – NEW (6 producers)
Urban Farm Tax Credit – NEW
Rolling Stock Tax Credit – 0
Agricultural Product Utilization Contributor Tax Credit – 31
New Generation Cooperative Incentive Tax Credit – 4
Specialty Agriculture Crops Act Tax Credit – NEW
Family Farm Breeding Livestock Tax Credit – 15

As you can see, in total, only 71 entities used these tax credits in the last full year they were active. That’s right, just 71! Forgoing millions of state tax dollars in favor of so few entities seems like the opposite of the governor’s sentiment in the tax rebate discussion. I’d simply ask the same logic to be applied to agricultural tax credits. Research and experience have shown us that these programs do not work. Instead of using the special session to double down on bad policies, a better and fairer solution is to lower taxes for everyone.

Affordable Housing and Kansas City: Further Thoughts

Posted on August 23, 2022January 13, 2026 by Elias Tsapelas

(You can read part one, part two, part three, part four, part five, part six, part seven, and part eight in this series here.)

The concerns people have over housing affordability raise a number of policy questions ranging from zoning to the fees Fannie Mae and Freddie Mac charge for new mortgages to the minimum wage, vouchers, and the low-income housing tax credit (LIHTC). In Missouri, the largest state-funded tax subsidy is the LIHTC program. The analysis in the previous two blog posts helps reveal why Missouri’s current LIHTC program is not designed to meaningfully improve housing affordability in Kansas City.

As I explained in the previous post in this series, Kansas City has a surplus of affordable housing for all income groups except those at the very bottom. But does the LIHTC program actually help those at the bottom of the income ladder?

There are numerous problems with the LIHTC program, such as the fact that it inflates construction costs. But arguably the biggest problem is that the criteria it imposes for developers to receive subsidies do nothing to promote additional housing at the cheapest rent levels. The most common arrangement for LIHTC developments is for 40% of the units to be reserved for those earning below 60% of the area median income (AMI). But the rents for the LIHTC units are not based on the income of the potential residents; rents are set based on the income in the surrounding area (the AMI). Because of this, even LIHTC-subsidized housing would likely not be affordable enough for the lowest-income families.

To use some numbers to illustrate this example: As explained above, rent needs to be no more than 30% of your income to be considered affordable, and LIHTC units considered “affordable” can be reserved for those making 60% of the AMI. So rent for that “affordable” unit in a LIHTC development will be 18% of the AMI (30% x 60% of AMI). Based on the $78,000 AMI in Kansas City, this means that the monthly rent for a family of 3 in that LIHTC unit is about $1,170 per month ($78,000 x 18% / 12). But as was described previously in this blog series, a family of three in Kansas City making 30% of the AMI needs rent to be about $585 per month to be considered affordable—and the cost of the LIHTC unit is nearly double that figure. Because of this, LIHTC tends to offer little to no help to the poorest residents.

In future work, the Show-Me Institute will provide more insights into not just the LIHTC program but the broader array of policies that have been discussed—or even new proposals that have not garnered as much attention—to promote a dynamic housing market that serves the needs of all Missourians.

Is There Actually a Teacher Shortage?

Posted on August 23, 2022January 13, 2026 by Susan Pendergrass

Susan Pendergrass speaks with Dan Goldhaber .

Dan Goldhaber is an AIR vice president and director of Analysis of Longitudinal Data in Education Research at AIR. He is also an affiliate professor in the School of Social Work at the University of Washington, the director of the Center for Education Data & Research, and the co-editor of Education Finance and Policy.

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Map of Commercial Property Tax Surcharges in Missouri

Posted on August 22, 2022January 13, 2026 by David Stokes

I know, I know, if you are like most Missourians, you’ve been talking about the commercial property surtax (or surcharge) constantly over the past few months and you are probably tired of the subject. But stick with me for at least one more post on the subject. As you all undoubtedly know based on your many conversations on the topic with family, friends, co-workers, and if this is actually true, highly likely your therapist, the commercial surtax is a property tax levied at the county level on commercial property only. Unlike other property taxes, it does not adjust downward as assessment value increases and it cannot be lowered by elected officials. Per the Missouri Constitution, it cannot be raised, and only voters can lower it. To date, voters in Missouri have never lowered a surcharge tax rate, but in November, voters in Clay County will have the opportunity to be the first to do so. The modest reduction Clay County is proposing to equalize itself with Jackson County, in my opinion, is very good public policy, but more on that later.

The tax rate varies by county based on the amount of money the tax it replaced—a commercial inventory-based tax—raised in each county in 1985. If your county had many businesses that generated products subject to the inventory tax, such as Clay County with the Claycomo Ford Plant, you probably have a high replacement tax rate. If you are a county that had a lot of businesses that did not generate much taxable inventory, such as counties in the Lake of the Ozarks region with its tourism economy, you likely have a low commercial surtax rate. But the real issue is that because of the difficulty in adjusting the rate, counties still have the rate based on the economic conditions of 1985.

That is why we built this map. The map below shows the commercial surtax rate for every county in Missouri. The redder the county, the higher the rate. The rate varies from $1.70 per $100 of assessed commercial valuation in St. Louis County to $0.01 in Reynolds County. The unweighted average rate is $0.53; the median rate is $0.41. Please check out the map (there is also a download link at the bottom of the post) and see where your county fits.

Part 8: Does Kansas City Have and Affordable Housing Problem?

Posted on August 19, 2022January 13, 2026 by Elias Tsapelas

(You can read part one, part two, part three, part four, part five, part six, and part seven in this series here.)

Our results in the previous blog post indicate that Kansas City may have an affordable housing problem, but one that doesn’t affect most residents. These findings don’t seem to match public perception on the issue. According to a recent national poll, approximately 90% of respondents stated they believe housing affordability to be a major issue where they live. According to the table below, using data from the same American Community Survey as used previously in this series, many households in Kansas City say they are spending more than 30% of their income on housing. Does that confirm there’s an affordability problem or is there more to the story?

Using household income as our primary measure for housing affordability may make the most sense based on the data our government collects, but it is not a perfect measure for gaining insight into what households find affordable, especially for those with lower incomes. For example, if you don’t have a car or another means of transportation, housing that’s miles away from your place of work that costs 30% of your income is likely not affordable once daily commute costs are taken into account.

In times with record-breaking inflation like we’re seeing now, and rising home prices, it’s easy to feel like there’s a housing affordability problem. Because for many people, the place they live or want to live has become more expensive to them. And as long as all Kansas Citians, regardless of income, are allowed to freely choose where they live and pay how much they feel they can afford to pay to live there, these same data will show some level of housing unaffordability that is not reflective of a need for government intervention, but a result of consumer choice.

That’s also why when discussing housing affordability and the public policies that are aimed at combatting the issue, we have to be careful and say specifically what we mean or the policies that follow will be sure to miss the mark. As I hope my posts have made clear, affordable housing policy is hard. Moreover, with house prices, rents, and interest rates rising more rapidly than incomes, the debate over housing affordability is likely to grow, and with it, the potential for misleading analysis and counterproductive policy solutions. In particular, any one-size-fits-all policy that aims to improve housing affordability in Kansas City by treating households with varying incomes the same would likely not be successful at achieving the desired results.

Part 7: Does Kansas City Have an Affordable Housing Problem?

Posted on August 18, 2022January 13, 2026 by Elias Tsapelas

(You can read part one, part two, part three, part four, part five, and part six in this series here.)

In the last post in this series, I talked about how to estimate potential housing demand. Now it’s time to talk about the supply. Since the majority of households earning below the area median income (AMI) are renters (as the graph in the last post showed), we can use census data to determine the number of units rented in Kansas City and how much they cost, which should give us a pretty good estimate of the supply of rental housing.

As the figure below shows, there weren’t many rental units available for less than $500/month at the time the survey was conducted, but there are more than 123,000 available between $500–999 per month. Moreover, the data below are not broken down by the number of bedrooms. Undertaking an even more granular analysis of the balance between housing demand and supply through a decomposition by family and unit size is left for future analysis.

With that in mind, we can combine the data we’ve put together in the last two posts to strictly compare the estimates of affordable housing supply with demand. This allows us to establish a potential surplus or shortage for any income group. Using the table below, we can see for each income bracket the supply of affordable housing. Then, by subtracting the demand for units from the supply, we can determine whether there’s a surplus or shortage of housing at the 30%-of-income affordability threshold for households at each income level.

The table above shows that there is a shortage of housing under the 30%-of-income affordability threshold in the Kansas City area for those making less than approximately 30% of the AMI but a significant surplus for all remaining income groups

The results in the table above are similar to what I referenced in part 5 of this series about a supply and demand analysis of St. Louis City and County contained in a report commissioned by the Community Builders Network of Metro St. Louis for the Affordable Housing Trust Fund Coalition. It’s not that Kansas City clearly lacks rental housing, but it may lack sufficiently affordable rental housing for the city’s poorest residents. And when “affordable” in this instance means rents lower than $580/month for a family of three, it’s somewhat understandable that such places could be hard to come by.

It is important to remember that these estimates for the potential housing supply and demand in Kansas City are only as good as the assumptions made to create them. In the next post, I’ll dive a little deeper into how different examinations of the same data can lead to different results for what should be done in Kansas City.

Fall 2022 Internships

Posted on August 17, 2022January 13, 2026 by Show-Me Institute Staff

Positions Open

The Show-Me Institute is pleased to offer internship opportunities for Fall 2022.

Internships are open to current undergraduate and graduate students, as well as recent graduates.
Summer internships will last approximately three months. The exact starting and ending dates are flexible, but each intern is expected to work at least 10 weeks. No internship shall start prior to September 6.
Fall interns will work a part-time schedule in the office, with exact hours to be determined later.
Interns will be involved in many aspects of the Institute’s operations. Interns will work closely with senior staff on a wide variety of projects. They can expect greater responsibility and personal attention than they would receive at larger organizations.
Interns will assist staff members with a variety of public-policy related tasks. These may include researching public policy topics, organizing events, and writing and editing op-eds, newsletters, blogs, studies, and other documents. Some administrative and clerical tasks will also be required.
A Show-Me Institute internship is an excellent opportunity to improve your research and writing skills. Each intern will produce regular blog posts and an op-ed on a public policy topic of interest to him or her. Each intern will receive feedback and assistance from SMI staff members throughout the process.
All internships are at the Show-Me Institute’s offices in Saint Louis, Mo.
Interns will be paid on an hourly basis.

Those wishing to be considered for an internship should submit an application and the requested supporting materials. The deadline for applications is August 29, 2022. However, we will begin conducting interviews as applications are received. Applicants can expect a decision no later than early-September.

About the Show-Me Institute

Founded in 2005, the Show-Me Institute is a nonpartisan, nonprofit public policy research organization. The mission of the Institute is advancing liberty with responsibility by promoting market solutions for Missouri public policy. For more information:

Phone: (314) 454-0647

Email: [email protected]

Part 6: Does Kansas City Have and Affordable Housing Problem?

Posted on August 17, 2022January 13, 2026 by Elias Tsapelas

(You can read part one, part two, part three, part four, and part five in this series here.)

As earlier posts in this series have explained, defining an affordable housing problem is complicated. So too, is solving one. Because the issue is so complex, the definitions and data used to characterize the issue are incredibly important. Over the next two posts, I’ll walk through an analysis that sheds light on the affordable housing situation in Kansas City, which can then serve as a jumping-off point for a discussion of potential solutions for the region.

Even though the U.S. Department of Housing and Urban Development (HUD) defines “affordable housing” as a household spending no more than 30% of their income on housing, it is important to distinguish between situations where households exceed that threshold out of necessity because of a lack of sufficient options versus situations where they actively choose to spend more than 30% of their income on housing even when more affordable and still viable options are available.

Every household is free to choose where they want to live and pay what they feel they can afford to pay regardless of whether the government would view their choice as “affordable.” Conversely, there is nothing wrong with choosing to spend as little on housing as possible. The point is that while an aggregate story tells a tale, the personal stories of individual Kansas Citians shouldn’t be lost in our discussion.

For these reasons, this post focuses on estimating the potential demand for affordable housing–namely, the number of units needed at different cost points to accommodate Kansas City households if they were to spend no more than 30% of their income on housing. This analysis is primarily about households making less than the area’s median income (AMI), as the term is defined and published by HUD. In Kansas City, the AMI for a family of three is $78,000 per year.

To determine the potential demand for affordable housing, we need an estimate for the number of households in different income ranges, and then we can multiply each income range by 30% and divide by 12 to arrive at the monthly housing cost range that would be affordable to those households. The definition of income we use comes from the U.S. Census Bureau’s American Community Survey (ACS) and encompasses labor market earnings, self-employment income, interest and dividends, retirement income, and “any public assistance or welfare payments from the state or local welfare office” but not other sources of government assistance such as Medicaid.

In principle, one could consider augmenting this measure to include non-cash benefits like Medicare for retirees, Medicaid, employer-provided health insurance and other such fringe benefits in the income measure for purposes of calculating the 30% affordability thresholds. But obtaining data on each of these items is quite difficult, and deviating from the widely used ACS definition would entail making judgment calls about the cash value that households attach to them.

For example, if a household receives $20,000 of income a year according to the ACS income definition, the 30% of income affordability threshold for the household would be $500 (= $20,000 x 30% x 1/12) in rent or mortgage payments. If the household also receives Medicaid benefits that cost the government $6,000 to provide—and if the household would have otherwise chosen to spend that same $6,000 itself absent Medicaid—then the household’s income effectively rises to $26,000, and one could argue that the affordability threshold should increase to $650 (= $26,000 x 30% x 1/12). However, if the household would not have spent a full $6,000 to obtain alternative health insurance in the absence of Medicaid, the cash equivalent value is less, and the affordability threshold would be between $500 and $650. Thus, you cannot assume that various government benefits are the equivalent of income.

You can see in the table below based on data from the ACS and compiled by HUD that there are approximately 820,000 households in the Kansas City metropolitan area. Additionally, the majority of those making less than the AMI are renters (which should make some intuitive sense).

The table below gives an idea of how much a family of three with various incomes below the AMI can pay for housing that is considered affordable using the 30% rule of thumb from HUD.

Taken together, we have an idea of how much housing could be needed in Kansas City, and at what price points. The next question is how those figures compare to the reported supply of housing in Kansas City, which will be the topic of the next post.