Page 285 – Show-Me Institute

Employment and Payrolls in Missouri Lag Nation

Posted on January 5, 2017January 13, 2026 by Rik W. Hafer

Since the end of the Great Recession in 2009, the Missouri economy has recovered slowly relative to the nation as a whole. This is nowhere more in evidence than in the employment and payroll numbers. Using data released in December by the Census Bureau we can get a picture of how successful Missouri has been in creating jobs and raising payrolls relative to the national average. The data cover the period from 2010 to 2014, the most recent year available. Instead of looking at just the aggregated numbers, the table below breaks down these figures by size of firm.

Employment in small firms—those with fewer than 20 employees—declined in Missouri following the recession. The U.S. overall eked out a only small increase in this category. For all other firm sizes, employment in Missouri establishments increased at a pace slower than the national average.

Payrolls in Missouri generally rose at a significantly slower rate than in the nation overall. This holds true across all sizes of firms. Only for large firms—those with more than 500 employees—was the increase in payrolls similar in Missouri and the nation.

Percentage Changes in Employment and Payroll, 2010–2014
Firm Size by Employment	Employment		Payroll
	Missouri	United States	Missouri	United States
<20	–2.48	0.55	5.49	10.45
20–99	4.96	8.45	11.89	16.60
100–499	2.01	7.67	14.53	20.73
500+	8.17	10.89	22.70	23.51

A Lesson in Tax Efficiency for Missouri

Posted on January 4, 2017January 13, 2026 by Michael Austin

Colorado has taken a step toward combating tax losses from online sales, and other states may take note. The U.S. Supreme Court declined to hear a challenge to a Colorado law requiring online sellers such as Amazon to let customers how much they owe in taxes, and to provide this information to the state as well. Accordingly, the United States 10th Circuit Court of Appeals decision that the State of Colorado can address use-tax noncompliance through notice and reporting obligations stands.

With the increasing prevalence of online retailers, Colorado’s use-tax revenues have become more volatile, and Colorado’s brick-and-mortar stores have been getting an increasingly unfair shake because they have had to collect and remit sales tax, whereas out-of-state stores have not. Why not?

A simple way of understanding the difference is that vendors located in Colorado have a legal duty to collect sales tax from purchasers on sales in Colorado. The average sales tax in Colorado is 7.52%. But what happens if a person in Colorado makes a purchase from out of state? If the person does not pay any sales tax to another state, the person may owe use tax to Colorado for that purchase. While the use tax is complementary to the sales tax, Colorado cannot require a vendor who has no presence in Colorado (or no “nexus”) to collect the use tax from the purchaser. Instead, the purchaser is supposed to self-report and remit the use tax if purchases exceed $500. Compliance with this law is not believed to be strong.

In fact, Colorado state officials estimate that Colorado is losing as much as $172.7 million a year in unreported/unpaid use taxes. Obviously, stores located in Colorado are at a competitive disadvantage if purchasers can buy the same product for 7.5% less simply by ordering the products from out of state

The Colorado law recently upheld by the U.S. 10th Circuit Court may be a model other states follow as they consider the revenues lost because of the different collection obligations for sales versus use taxes. The 2010 Colorado law imposed three obligations on out-of-state retailers that do not collect sales taxes.

Send a “transactional notice” to purchasers informing them that they may be subject to Colorado’s use tax.
Send Colorado purchasers who buy goods from the retailer totaling more than $500 an “annual purchase summary” with the dates, categories, and amounts of purchases, reminding them of their obligation to pay use taxes on those purchases.
Send the Colorado Department of Revenue an annual “customer information report” listing their customers’ names, addresses, and total amounts spent.

As in Colorado, Missouri’s brick-and-mortar stores are likely at a disadvantage against online retailers because many Missourians are probably unaware of their use tax responsibility. If noncompliance is widespread, then the issue is whether Missouri has a sensible and fair tax policy. At a minimum it would seem that the state should not have a tax system that is honored more in the breach than in the observance.

Kansas City’s Remarkable Transportation System

Posted on January 4, 2017January 13, 2026 by Patrick Tuohey

Wendell Cox recently published a paper for the Show-Me Institute on Kansas City’s competitive advantages. One of the things that sets Kansas City apart from many of its peer cities is its amazing transportation system. Cox writes:

The metropolitan area is served by a comprehensive freeway network and a good arterial street and boulevard network. Only two of the 50 largest U.S. urban areas have lower traffic volumes per freeway lane mile than Kansas City. This provides Kansas City with a considerable advantage in both personal and freight mobility.

Cox writes that according to Tom Toms Traffic Congestion Index, “Kansas City ranks as the least congested metropolitan area, overall, in the world among the 146 it ranks.” This is not because there are fewer people on the roads in Kansas City or because a larger percentage of people use transit. “Driving alone is by far the most important means of travel to work. In 2014, 82.6 percent of Kansas City commuters reached work driving alone,” writes Cox. Driving to work alone is not the sole dominion of wealthy workers, however:

Automobile usage is so pervasive that it is little different among low-income employees than among the overall work force. In Kansas City, only 3.0 percent of low income employees commute to work by transit. This is more than the share of the overall workers using transit, but still very small. Cars are much more important to low-income workers. This small difference is less than might be expected in light of the perception that low-income residents depend substantially on transit for their mobility. In 2013, 76 percent of low-income Kansas City workers drove alone to work, nearly as high as the approximately 83 percent of all workers who drove to work.

The next time you hear someone wax rhapsodically about the need for an expanded streetcar system in Kansas City so we can be like Denver and Portland—or because they think it will help poor people better get to work—direct them to Cox’s paper. Kansas City is not like those places—certainly not when it comes to density or traffic congestion.

Policy Breakfast: Stuck in the Middle with Mizzou

Posted on January 4, 2017January 13, 2026 by Michael Q. McShane

The last year and a half has been a tumultuous time for Mizzou and the University of Missouri system as a whole. The appointment of a new president and the desire for a new direction for the university system give us an opportunity to step back and look at how well Mizzou is performing—how it stacks up to schools across the state, region, and nation—and to offer ideas to help make it stronger. This presentation will begin with a discussion of data on the university’s performance and will also offer reform ideas from other universities.

Development Can Happen without Subsidies

Posted on January 2, 2017January 13, 2026 by Patrick Tuohey

It is a sign of how bad the subsidy culture is getting when Kansas City Star reporter Diane Stafford has to mention that a proposed Country Club Plaza apartment building plan, “calls for no public incentives.” How did we get to the point where the mere fact that private developers are developing privately is noteworthy?

Back when City leaders referred to themselves as “geniuses,” City Hall was handing out subsidies to everyone. H&R Block kicked off the feeding frenzy with their downtown office building, followed by the financially disastrous Power & Light District deal that has taxpayers footing the bond payments. In recent years taxpayers have chipped in for wealthy corporate headquarters for Burns & McDonnell and Cerner, and subsidized luxury high-rise apartment buildings. Even The Star itself has received a tax abatement. Once taxpayers and parents raised an objection to a subsidy for architectural firm BNIM to build in a hip part of town, the Council considered some reforms. Mayor Sly James would have none of it and complained that “we may as well put up a sign that says Kansas City is once again closed for business.”

Obviously, James is wrong. As Kansas City contemplated subsidizing a Hyatt hotel downtown, Marriott was building two on their own dime a few blocks away. The owners of Ward Parkway Mall are building a restaurant plaza without any subsidies. And now we learn of this proposed 13-story, 257-unit apartment building just west of Country Club Plaza. This is great news, not just because someone wants to invest in Kansas City, but because they are willing to invest their own money rather than seek taxpayer subsidies.

As Show-Me Institute writers have pointed out for years, not only do subsidies starve cities, counties, schools, and libraries of the revenue they need to provide basic services, subsidies also pervert developers’ incentive structure. And all this for projects that research shows likely would have been built anyway.

Real private investment—without taxpayer subsidies—is a true sign of economic health. City leaders need to put the brakes on handing out subsidies and let more private investment come.

Fuzzy Thinking on the “Price” of Doing Business

Posted on January 2, 2017January 13, 2026 by Andrew B. Wilson

As someone who ran his own business for many years, I am aware of the difference between cost and price, even if it is something that eludes many political leaders and more than a few businesspeople with their noses in the public trough.

Cost is the expense that a business incurs in making a product or performing a service. Price is the amount of money that a customer pays for the product or service. The difference between the two is the business’s profit or loss.

In an article that appeared in the St. Louis Post-Dispatch on Dec. 24, Missouri Gov. Jay Nixon spoke in favor of awarding $120 million in subsidies to a group of wealthy businessmen who want to build a brand-new stadium and bring a Major League Soccer (MLS) franchise to downtown Saint Louis.

“It’s the price of doing business,” Nixon said, adding: “Folks may want to anguish a little bit” over the ladling out of such a large sum of public money to underwrite a private venture, but not to worry – because, “quite frankly,” this is a necessary and “cost-effective” way of putting a new business (the MLS franchise) on its feet.

The suggestion here is that the city of Saint Louis and the state of Missouri must be willing to part with $120 million – that being the price demanded by the group of businessmen (with the enthusiastic support of MLS Commissioner Don Garber) – in order to have a good chance of landing the soccer franchise.

But wait a minute.

If this was such a great business opportunity, why were these self-described businessmen and the MLS panhandling for public support? Why didn’t they think they could cover their costs – including the cost of building the stadium – through the sale of tickets, merchandise, and TV rights?

Running a business isn’t supposed to be easy. If misguided or self-interested political figures try to make it so (through public subsidies to private ventures), they inevitably divert scarce resources to less productive uses.

They make it possible for those without a solid business plan, and without any real appetite for innovation or risk, to enjoy an undeserved moment in the sun – at taxpayer expense.

At the same time, they encourage others to eschew enterprise for the seemingly easy but dead-end path of cronyism.

In short, they only poison the well that produces prosperity under the free market system.

What our outgoing governor called “the price of doing business” has nothing to do with business in any serious sense. Incoming Gov. Eric Greitens called it by its proper name.

It is “corporate welfare” for the idle rich.