The Lesson from Kansas—and the Question for Missouri

Posted on by Scott Tanner
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Dave Helling recently responded to my Show-Me Institute colleagues’ piece on what Missouri should learn from Kansas’s tax changes a decade ago. He questions whether Missouri’s current discussion is meaningfully different from what happened under former Kansas Gov. Sam Brownback.

I respect Dave and welcome the debate. Kansas belongs in this conversation. But if we are going to invoke it, we should be clear about what it demonstrates.

Kansas did not experience instability simply because it lowered tax rates. It ran into trouble because revenue fell precipitously and the state did not appropriately adjust its fiscal structure. Lawmakers enacted sharp tax reductions, created a large pass-through exemption, and left spending commitments largely intact. The result was a structural imbalance.

That is the lesson.

Dave suggests that state tax policy has only a marginal relationship to economic growth. It is true that no state controls the national business cycle. But it does not follow that tax structure is economically irrelevant.

Growth reflects millions of individual decisions—where to work, invest, expand, or relocate. Tax policy influences those decisions at the margin. And marginal decisions, aggregated across an economy, shape long-run performance.

If tax policy does not meaningfully affect behavior, it becomes difficult to explain why businesses restructured to qualify for Kansas’s pass-through exemption, why cities such as Kansas City offer tax abatements and other tax incentives to attract employers, or why area policymakers worry about the Border War. Incentives matter. They always have.

Both Kansas City and St. Louis are about to vote on retaining their 1% earnings taxes. Does anyone doubt the tax is one more incentive to live and work outside city limits?

None of this means that tax cuts guarantee prosperity. Lower rates increase the after-tax return to work and investment; they do not override broader economic conditions. But acknowledging limits is not the same as declaring irrelevance.

Kansas was not a clean test of “supply-side theory.” It did not eliminate its income tax. It reduced rates quickly, carved out a significant exemption, and failed to align revenue reductions with sustainable fiscal adjustments. When revenues declined more than expected, the state lacked sufficient buffers.

That was a structural failure, not proof that tax policy is immaterial.

Missouri’s debate, then, should center on structure and discipline. Any serious reform would require conservative revenue estimates, a modernized and stable tax base, adequate reserves, and spending aligned with realistic collections. Without those elements, skepticism is warranted. With them, instability is not inevitable.

There is also a tension in arguing that tax policy has little influence on economic outcomes while simultaneously warning that changing it risks serious harm. If tax structure truly operates only at the margins, its effects—positive or negative—cannot be dismissed when convenient and amplified when politically useful.

The more accurate position lies between extremes. Tax structure is neither a magic lever nor a null variable. It is one component of competitiveness, and like any component, it must be designed responsibly.

Kansas offers a caution about execution. But the Kansas story does not settle the broader question of how Missouri should structure its tax system going forward.

That question deserves a debate grounded in fiscal mechanics and economic incentives instead of caricatures.

Teachers’ Unions Get Desperate

Posted on by Scott Tanner
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A recent editorial in the Wall Street Journal lays out what has been on the minds of many (or at least mine) for some time. The traditional education establishment that was in charge of all things K-12 in the last century is crumbling. In the last decade, millions of children have exited their assigned public schools in exchange for a scholarship that is a fraction of what was spent on them by the education blob. It is becoming clear—parents want to be able to choose from a range of options when it comes to the education of their children.

Decades of surveys find that more than 70 percent of voters are in favor of open enrollment, charter schools, and education scholarship accounts. Similar surveys find that only about four in ten parents would choose to send their children to their assigned district school if they could choose from among a list of options. Public sentiment could hardly be stronger or more consistent.

This isn’t a fad or a temporary political moment, as teachers’ unions might have hoped. Having school choice is a sticky, pervasive expectation of raising children in the twenty-first century. And because union leadership has lost the battle of convincing parents that the establishment knows best when it comes to how to educate their children, they’ve turned to their last-ditch option—lawsuits.

Missouri is no exception in the teacher union legal battle. The Missouri National Education Association (NEA) is now suing to stop the MOScholars program. MOScholars gives parents around $7,000 in scholarship dollars to spend on alternative education options such as private school, a micro school, or homeschool, to name a few. By comparison, the average Missouri school district spent over $18,000 per student last year. Yet there are waiting lists for families willing to take less than half that amount to send their children to a school of their choice.

Over $15 billion was spent on Missouri’s 850,000 public school students last year. Yet the union representing the teachers in those schools is spending union resources to prevent $50 million (roughly one third of one percent) of the state’s education dollars from going to families who want out. It feels like the Missouri NEA is afraid the tide is turning. It feels like desperation.

More Evidence on Grade Inflation in Our Schools

Posted on by Scott Tanner
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QNS, a local news outlet covering Queens, New York, released an interesting article about a local high school under investigation by New York City Public Schools. Teachers at the school claim they are forced to pass failing students. Such blatant grade-inflation policies are uncommon, but I suspect softer versions of the policy are rampant in our public schools nationwide, including here in Missouri.

The quotes in the article speak for themselves, so I’ll just copy and paste them here without commentary:

“Students regularly fail tests and other assignments, teachers [said], but still receive passing grades.”

“‘Students have mentioned that it’s not fair that they’re trying and then they see classmates show up half the time and have nearly an equivalent grade,’ the teacher said. ‘They get frustrated, which will then demotivate them from doing work because they think it’s an unfair policy.’”

“Last year’s mastery grading policy stated . . . that any grades a student receives that are not 100 would not be included in their [final] grade.”

“While teachers maintain the ability to draft their own syllabi, they said that many teachers have been forced to adjust their expectations over time due to the current school administration. ‘I was guided in trying to avoid failing students,’ [one] teacher said.”

“The teacher . . . said that if they did not reach a certain percentage of students passing the class—80%—they would be called into a meeting with the administration to discuss how they could improve the grades of students.”

“One teacher said out of around 100 students, they haven’t seen over 20 of them all school year. If they must pass 80% of the students, that means anyone who shows up to class must pass in order to achieve that goal, regardless of whether the students do any work.”

—————–

I know I just copied and pasted this whole assignment. It seems lazy, but in my defense, this is A-level effort in many of our schools.

Watch: The Public Safety Climate in the City of St Louis

Posted on by Zach Lawhorn

On January 21, 2026, the Show-Me Institute hosted an in-depth discussion on crime and public safety trends in the City of St. Louis at the Knight Center at Washington University. Patrick Tuohey, Senior Fellow at the Show-Me Institute, was joined by local experts Gabe Gore, St. Louis Circuit Attorney; Janet Lauritsen, Curators’ Distinguished Professor Emerita in the Department of Criminology and Criminal Justice at the University of Missouri–St. Louis; and Pernell Witherspoon, Senior Professor of Criminal Justice at Lindenwood University.

Produced by Show-Me Opportunity

Keep an Eye on the DATA Act in Washington, D.C.

Posted on by Scott Tanner
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As a writer, there are moments when someone else articulates an idea so well that rewriting it in my own words would be unnecessary. A recent op-ed in The Hill did exactly that, clearly laying out the energy challenges facing the United States:

The U.S. electricity sector is a slow-moving maze of regulations, shaped by decade-long transmission approvals, time-intensive interconnection studies for new generators and large new customers, and overlapping layers of state, regional and federal bureaucracy. . . . The regulatory thicket surrounding the electricity industry was tolerable when the pace of change was slow. However, with the rise of AI and renewed growth from manufacturing and electrification, we can no longer endure a sclerotic grid.

In addition to reforming our rigid, reluctant-to-adapt grid, there are questions about whether average ratepayers should be on the hook for increased electricity demand being driven by a few large customers.

In the midst of all of these concerns, there is a U.S. Senate bill that could help fix the problem: S.3585 – DATA Act of 2026. The bill was recently referred to the Senate Committee on Energy and Natural Resources.

I have written about consumer-regulated electricity (CRE) for Missouri, which would reduce the number of state-level regulations that off-grid CRE utilities (CREUs) would face. (You can click here if you’re interested in what a CRE policy might look like in practice.) However, even if it were allowed in Missouri, there would still be many federal-level regulations that would diminish the benefits of the new practice.

That is where the DATA Act becomes so vital. The act would exempt certain new CREUs from specific federal regulations that apply to the broader grid. If our state and federal governments approve CRE, there would be a pathway for large electricity users like data centers and aluminum plants to more quickly generate their own electricity without impacting the rates of average Missourians. That would be a win for all of us.

All of this suggests that the DATA Act of 2026 is something to watch in Washington, D.C. But Missouri should not wait until the federal government makes its move. We should be proactive and allow CREs in our state, creating a pathway to address modern energy challenges that would become even more viable if federal reforms under the DATA Act follow.

The Rise of Labor-Based Grading and the Continuing De-emphasis on Skill Development at U.S. Universities

Posted on by Scott Tanner
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Evidence of grade inflation continues to mount in K-12 education and at universities (e.g., see here and here). The rising grades reflect a degradation of academic standards. There is clear evidence that when expectations of students are lowered, they (intuitively) respond with less effort.

A recent example of a low-standards grading philosophy is equity-based grading. The philosophy, intended to promote equity by recognizing the varied circumstances and challenges students face, emphasizes measures of student engagement rather than results. However, by de-emphasizing important skills such as turning in assignments on time and demonstrating skills on assessments, it lowers academic standards, reducing effort for true mastery. Cory Koedel recently wrote in this space about how the San Francisco Unified School District (SFUSD) backed away from a “Grading for Equity” plan when too many community members complained.

A new low-standards philosophy, Labor-Based Grading (LBG), is also gaining traction in higher education. LBG is an alternative grading style in which students and teachers establish a grading contract that allows students to earn a default grade if all the work outlined in the contract is completed, no matter the quality of the work.

Notably, departments at prominent universities such as Penn State University and New York University have recently begun implementing LBG (mainly humanities departments—here and here). Practices at prominent universities often trickle down to less-prominent ones, and ultimately into K-12 classrooms as future educators who are exposed to these practices in college implement them in their own classrooms. LGB could come to a school near you, and sooner rather than later.

The key concern is that LBG does not set up students for success. In the real world, effort is not rewarded if it does not generate productive outcomes. In fact, it is a critical life skill to be able to apply effort in a productive manner. But LBG rewards effort for effort’s sake.

LBG exemplifies the continued push by some to lower academic standards. It is well intended, but this doesn’t make it any less harmful. It is important to remain vigilant and continue to advocate for rigor in a system where rigor is constantly under assault.

The TIF that Keeps Taking

Posted on by Scott Tanner

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Thomas Friestad at the Kansas City Business Journal wrote recently that an engineering firm (Gannett Fleming TranSystems, formerly GFT) is moving its offices to the H&R Block building in downtown Kansas City.

Longtime Show-Me Institute readers will recognize H&R Block as a poster child for the false claims that economic development subsidies drive job creation. But this latest news only makes the point more relevant.

The TIF project was adopted in July 2006 and will last for 23 years, through 2029. For the duration of that time, all the additional property taxes and half the increase in sales and income (earnings) tax generated at the site are returned to the developer to offset the costs of developing the site. According to the latest report from the Missouri Auditor’s office, as of April 2023, this subsidy has redirected $23.5 million in property taxes and another $73.4 million in sales and earnings taxes away from the basic services they would have otherwise supported (schools, roads, libraries, etc.), instead sending the money back to the developer.

GFT moving into the H&R Block building means that a portion of the taxes it pays, most notably the 1% earnings taxes levied on each employee, will now also be redirected away from basic services to the developer to pay down the cost of the H&R Block building.

A lot of time is spent talking about how Kansas City loses revenue when businesses leave the city. We need to remember that due to our generous subsidy culture, we often lose revenue even when companies remain.

Side note: One can immediately imagine a scenario wherein developer landlords in TIF districts lower their rents because they know they will capture the additional tax revenue, thus undercutting properties that actually pay taxes. These deals are no way to run a city.

To the Missouri House Elementary and Secondary Education Committee: We Have a Problem

Posted on by Scott Tanner

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I attended the Missouri House Elementary and Secondary Education Committee hearing on Wednesday, January 28. The hearing covered two bills under current consideration—one on A–F letter grades for schools, and the other on literacy reform.

The committee is a diverse group with diverse views, as were the individuals giving testimony. I was expecting a lively debate and opinions from all different angles, and that’s what happened.

However, one thing I wasn’t expecting was the view expressed by several members of the committee that Missouri schools are doing just fine, or even excelling. Unfortunately, this is simply not true. Missouri schools are performing very poorly. The data on this point are publicly available and unambiguous.

The best evidence comes from the National Assessment of Educational Progress, or NAEP, which is widely viewed as providing the most credible test data in the country. Here are charts showing the changes over time in Missouri’s national rank on NAEP, in 4th- and 8th-grade reading, since about the turn of the century:

(These graphs are courtesy of the Show-Me Institute’s Avery Frank.)

Our 4th-grade reading results are especially bleak—we rank 38th out of the 50 states as of 2024, whereas two decades earlier we ranked in the low twenties. Today, an alarming 42 percent of our 4th graders score Below Basic on NAEP.

Making matters worse, our ranking decline since about 2015 is in the context of generally declining test scores nationwide during this time. Our scores are declining faster than the rest of a declining nation.

The only reason not to be worried about this is if you don’t believe these tests tell us anything important. On this point, there is overwhelming evidence that NAEP—and standardized tests more broadly—are highly predictive of consequential long-term outcomes. There are hundreds—maybe thousands—of articles that show a link between standardized test performance and later life outcomes.

In fact, just last year a high-quality study on NAEP scores found the following: “More recent birth cohorts in states with large increases in NAEP math achievement enjoyed higher incomes, improved educational attainment, and declines in teen motherhood, incarceration, and arrest rates compared to those in states with smaller increases.” Whatever outcome you care about for our children, NAEP scores predict it. (If you’re interested in recent, related evidence from Missouri’s MAP test, see here.)

Our declining test scores should concern all of us. Whether the committee members recognize it or not, under their watch and the watches of their predecessors over the last decade plus, Missouri’s academic performance has been declining. An overwhelming body of research tells us the decline will have real consequences for our children, and ultimately this will have real consequences for the future of our state.

I recognize we won’t all agree on the solutions, but it became apparent during the hearing that we don’t even agree on the problem. I encourage skeptics of my message—especially members of the education committee, who have the power to make change—to look at the data themselves. Putting our heads in the sand will not make the consequences any less dire down the road.

(If you’d like to see specific examples to get a sense of the kinds of NAEP questions Missouri children can and cannot answer correctly, see an earlier post here.)

What’s the Deal with the Tax Subsidies for Youth Sports Centers?

Posted on by Scott Tanner

Yes, you are supposed to read the title like Jerry Seinfeld doing a bit. (I met Keith Hernandez at an event in St. Louis recently, so obviously Seinfeld is on my mind now.)

Youth sports centers have been exploding around Missouri for two decades and, unfortunately, tax subsidies seem to go hand-in-glove with them. Let’s make one thing clear at the start: these aren’t parks. These aren’t public facilities where any kid or family can go and play or picnic or fly a kite with a delightful, singing nanny. These are businesses aimed at youth travel sports clubs, which are private, expensive teams. I like club sports (if my kids’ coaches are reading this, please don’t bench them). I just don’t think they fit any definition of a public good. These private facilities have no business being subsidized by taxpayers; if there is a market for them (there is), then they will succeed on their own.

Here is a brief listing of some of the major youth sports facilities that received taxpayer funds of various types (grants, incentives, special sales taxes, etc.) by various governments:

This is just a short list. I am sure there are more. The first policy change we need is to remove the ability of cities to make these decisions. At a minimum, counties should make all of these tax subsidy decisions. County officials are at least answerable to the voters for their choices. Municipalities routinely grant tax subsidies to businesses where the immediate impact to the city is limited but the harm to the school district, library district, and other entities that rely on tax revenue is substantial. Yet voters in those other districts often don’t live within the municipality and can’t hold anyone responsible with their votes.

Beyond that, we need local municipal officials to better understand basic economics and think both long term and regionally. I am not holding my breath.

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