Page 400 – Show-Me Institute

Are Things Looking Up in Kansas?

Posted on March 25, 2015May 5, 2026 by Michael Rathbone

There is an old story from the Civil War that takes place after the first day of the Battle of Shiloh. The Union Army of the Tennessee under General Ulysses S. Grant had been surprised by Confederate forces and had been pushed back to the Tennessee River. That evening, Brigadier General William Tecumseh Sherman remarked to General Grant, “Well Grant, we’ve had the devil’s own day, haven’t we?” Grant replied, “Yes. Lick ’em tomorrow though.” With the assistance of Union reinforcements that evening, that’s exactly what they did.

Now, the economic border war is not nearly as serious as actual combat between two opposing armies, but like Confederate General P.G.T. Beauregard, opponents of the tax cuts in Kansas are eager to declare a complete victory. The truth is that it appears Kansas just received some reinforcements, this time from the Bureau of Labor Statistics (BLS).

According to the BLS, Kansas private-sector job growth in 2014 surpassed that of Missouri (1.87 percent vs. 1.16 percent). Also, earnings in Kansas have grown nearly five times the rate that they have in Missouri (2.98 percent vs .59 percent). Does this mean we, as tax cut proponents, should declare victory? No. The next couple of months’ job or wage figures could change how the two states stack up. Overall, I think we just need more time to determine the tax cut’s effects. I definitely wouldn’t go as far as to say that these tax cuts are leading Kansas toward a disaster of biblical proportions.

As I’ve said many times, tax cuts are not everything. There are many factors that influence how an economy performs. However, with that being said, taxes do matter and income taxes in particular are harmful to economic performance. I hope these latest figures can give opponents a moment of pause before writing Kansas’ tax cut obituary.

Restoring Accountability and Transparency-Four Quick Points on SB 549

Posted on March 25, 2015May 5, 2026 by John Wright

After several posts directed at the labor reforms included in SB 549, it might be useful to summarize what the bill would do. SB 549 is aimed at increasing accountability and transparency in government labor relations. If passed, the bill would:

Require a union that seeks to represent public employees as their exclusive representative to stand for re-election by those employees every two years. Existing law often prevents public employees from having a say in who represents them. These elections would ensure public employees have a voice.

Require collective bargaining sessions to be held in open sessions covered by the Sunshine Law. Due to a legal loophole, such meetings often are held behind closed doors.

Require government unions to disclose financial information in an annual filing. These filings would be similar to the filings traditional private-sector unions already have to make.

Limit the term of government collective bargaining agreements to two years, rendering evergreen clauses unenforceable.

All four of these are modest, yet important reforms.

Don’t Let Transportation Development Districts Charge Fuel Taxes

Posted on March 24, 2015May 5, 2026 by Joseph Miller

A new bill in the Missouri Legislature (HB 1362) would allow transportation development districts (TDDs) to implement fuel taxes along with sales and property taxes. This is a bad idea because TDDs are only partially democratic, not transparent, and very often do not spend their resources on roadwork.

Fuel taxes can be an effective way of paying for roads and bridges in Missouri. As we have argued many times before, fuel taxes tie the act of using roads with paying for the upkeep of the roads. We have even written on how fuel taxes at the county and city level may be a feasible option for road funding as well.

However, there are important differences between state fuel taxes that pay for highways and fuel taxes imposed by TDDs. Fuel taxes at the state level, and even the county or city level, must be spent on highway- or road-related projects. These taxes are only passed by existing, regularly elected legislatures (or a vote of the people); the political boundaries are well known and easily recognizable. State and local governments provide extensive information on how fuel tax revenue is collected and spent.

TDDs are a different story altogether. For instance, do you live in a TDD? Have you shopped in a TDD in the last week? If you can answer yes to any of these questions, do you know what type of tax they collect, what they spend tax money on, where their boundaries are, or who runs the district? Did you ever get to vote on the TDD or its representatives?

Even for those in charge of state oversight, it is hard to know the answer to any of these questions. The fact is that TDDs are ad-hoc specially created taxing districts with idiosyncratic boundaries. They are created through what is not a normal democratic procedure (see “qualified voters” and flexible district boundaries), with boards that are not elected in the normal sense. They do not have to spend their money on roads at all, such as TDDs in Saint Louis and Kansas City that fund streetcars.

It is questionable enough to allow these types of entities to charge sales and property taxes like they do now, but allowing fuel taxes would be even worse. It is easy to imagine a situation where many gas stations in the state quickly become part of microscopic taxing districts that are impossible for the public to be aware of or to track.

State fuel taxes are a reasonable method of funding state roads, but allowing quasi-democratic, non-transparent, and (to the lay resident) invisible taxing districts to use fuel taxes to fund hyper-local desires is more a recipe for highway robbery than highway funding.

Touted Benefits of the Film Tax Credit Program Are Misleading

Posted on March 24, 2015May 5, 2026 by Jessica Stearns

On Wednesday, March 18, the House Committee on Economic Development and Business Attraction and Retention held a hearing on House Bill 803 (HB 803), which would reinstate the film tax credit program. This is the same program that granted a $2.36 million tax credit to the producers of Gone Girl. Michael Rathbone and I submitted testimony against the reauthorization of the film tax credit program. Luckily, Michael was able to testify before the committee. He was the only person to testify against this wasteful policy proposal.

Since news articles reporting on the hearing only highlighted the arguments of those in support of HB 803, I’ll reiterate what analysts at the Show-Me Institute have written so many times before: Film tax credits are bad public policy!

Supporters of the program argue that the film tax credits bring immense economic benefits to the state. However, the problem with this argument is that it doesn’t look at the costs of the program along with its benefits. While supporters spout claims that “Gone Girl brought in $7 million into the economy,” the reality is the program’s return on investment (tax dollars generated versus tax dollars spent) is merely cents on the dollar. In other words, the program does not pay for itself.

Furthermore, the argument that the film tax credit helps create permanent jobs is a fallacy. Film production jobs, by their very nature, are short-lived. To add insult to injury, the highest paying jobs often go to non-Missouri residents, since production jobs require specific and highly skilled professionals. However, perhaps the most shocking fact is that Missouri has had a film tax credit program since 1999, and yet, according to data gathered by the Bureau of Labor Statistics, jobs related to film production decreased during the time the film tax credit program was in place.

It is bewildering that lawmakers can ignore important economic indicators, and the advice of the state’s own Tax Credit Review Commission, just so Missouri can play hostess to Hollywood for a few weeks. I hope legislators and political spectators will take a look at our testimony and exercise some common sense.

Still Coughing Up More for Education

Posted on March 24, 2015May 5, 2026 by Michael Rathbone

In an era where we shield more and more people from being offended, never mind hurt, it appears that it is still okay to pick on smokers. So it’s no surprise that some policymakers want to use them to fund goodies for the rest of us.

The latest anti-smoker proposal aims to raise the cigarette taxes to around 90 cents a pack (cigarette taxes in Missouri currently are 17 cents a pack) in order to fund scholarships for students. On the surface, this proposal sounds appealing, but raising excise taxes in order to fund education is not good policy. There are a couple reasons why this is the case: First, cigarette taxes are regressive. Poor people smoke more than higher-income individuals, and smoking takes up a higher percentage of their income.

Second, an increase in cigarette taxes can harm Missouri businesses. More people commute into Missouri than out of it. Our low excise taxes serve as an inducement for out-of-state visitors to purchase alcohol, gasoline, and cigarettes in Missouri instead of Kansas and Illinois. The chart below from showmedata.org shows just how low Missouri’s taxes are in comparison to Kansas and Illinois (Missouri is in yellow).

If this proposal becomes law, Missouri’s cigarette tax rate will be higher than in Kansas. It isn’t hard to imagine commuters on State Line Road choosing a Kansas convenience store over a Missouri one if products are cheaper.

Now, some might argue that raising cigarette taxes is good in and of itself because doing so will reduce cigarette usage and improve public health. That’s partially true, but the effect is small. If the increased tax revenue would be spent on treating smoking-related illnesses, then the conversation would be worth having. However, even if we agreed that a tax hike should go to increased health spending, if taxes go up too much, people would simply resort to smuggling.

Personally, I’m not a fan of smoking. My grandfather suffered from emphysema due to his smoking. However, just because I don’t like an activity doesn’t mean I believe the government should treat it as a piggy bank for more spending. Let’s find ways to cut spending, not increase it.

Is the Metropolitan Taxicab Commission Acting Illegally?

Posted on March 23, 2015May 5, 2026 by Joseph Miller

At a hearing on SB 351, which would create state regulations on ridesharing companies, the bill’s sponsor warned that existing taxicab regulatory bodies in the state, especially the St. Louis Metropolitan Taxicab Commission (MTC), may be violating federal law. The source of this trouble is a recent U.S. Supreme Court ruling.

In the case, North Carolina Board of Dental Examiners v. Federal Trade Commission, the FTC claimed the North Carolina dental board violated federal antitrust laws in its attempt to eliminate market competitors, even though the board was empowered by the state to regulate dentistry.

Prior to this case, it was assumed that state-created professional boards and regulatory bodies were immune from antitrust law. But in their decision, the Supreme Court held that this is not always the case. The majority opinion stated that active state supervision is required for bodies that act as regulatory agents of the state but are controlled by market participants. In the case of the North Carolina dental board, the supervision was found lacking.

This brings us to the MTC. While the commission was created by the state, many of its members represent taxicab companies. There is no meaningful state oversight of what the MTC actions. It is possible that, if a court holds that the commission is effectively controlled by taxi market participants, the MTC would not be immune from antitrust legislation.

This would be a serious legal problem for the MTC, which fixes pricing, limits the number of taxi permits, and blocks the entry of ridesharing companies like Uber and Lyft. To preempt this type of legislation, the state could either make sure taxicab companies do not control the commission or more closely supervise the MTC’s actions. Given the anti-competitive behavior of the MTC as it exists today, either outcome would be an improvement for Saint Louis residents.

Increased Fire Tax in Kirkwood? Why Now Indeed!

Posted on March 23, 2015May 5, 2026 by John Wright

A leaflet arguing for a tax increase surprised some Kirkwood residents this month when they found it tucked into their city-issued electricity bills. The tax advertised in the leaflet would up the sales tax rate by 0.25 percent in order to add new cross-trained firefighter/paramedics to Kirkwood’s Fire Department. With the need for municipal fire services in decline and only an increase in EMS cited as justification for the tax increase, I can’t help but wonder if this tax hike would unnecessarily nickel and dime people choosing to spend their money in Kirkwood.

Let’s break this down. Since the 1970s and 1980s, when fire alarms, new technologies, and improved building standards decreased the number and severity of fires in the country, there has been a steady increase in the number of people employed as firefighters. You might think the number of people employed to fight fires would decrease as the need for fire response decreased. You’d be wrong.

To compensate for this decrease in the demand for their services, fire departments began taking on the broader role of providing emergency medical services—that is, driving ambulances and providing on-the-scene support to people involved in accidents. Fire departments might have saved money if they then decreased the number of people employed as firefighters and invested more heavily in paramedics and EMS equipment, which typically cost less, but that didn’t happen.

Here we have a textbook case of mission creep, the tendency of government organizations to gradually shift their goals and expand their purpose. Society no longer needs as many people fighting fires, yet because government lacks an efficient mechanism for linking supply and demand, we continue to spend an increasing amount of tax revenue on fire protection. Government has a tendency to grow, even as needs shrink.

If the city of Kirkwood wants more paramedics, then they should hire more paramedics, not firefighters. Shifting resources to pay for more EMS and less fire services, or even privatizing certain functions, could help pay for this. It’s simply a waste of money to raise taxes to hire workers for an unneeded and more expensive job.

New Video on Public Financing for NFL Stadiums

Posted on March 20, 2015May 5, 2026 by Joseph Miller

Recently, Reason released a video on public financing for stadiums. In it, they show how sports stadiums are bad public investments from an economic standpoint, which we have reported here many times. Check out the video and see the answer to the question: “Even though study after study has shown little to no economic benefit, why do cities continue to be so stupid when comes do building stadiums?”

Mark Your Calendars, Kansas City and St. Louis: Michael Cannon is Coming to Town

Posted on March 20, 2015May 5, 2026 by Patrick Ishmael

Michael Cannon is the director of health policy studies at the Cato Institute and is one of the most prominent figures in the free market movement today. Cannon’s national influence extends to a wide swath of health care issues, but lately it’s his work focusing on the health insurance subsidies of Obamacare that has been most prominent. With Case Western Reserve law professor Jonathan Adler, in 2013 Cannon co-wrote “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits under the PPACA.”

If that topic sounds strangely familiar to you, fear not; it is indeed the topic at the center of the King v. Burwell case, which is currently before the Supreme Court. Cannon has been instrumental in not only providing the research that undergirds the plaintiffs’ case, but he has also been instrumental in delivering clear, concise and compelling explanations of what the government did with these subsidies (and why it matters) to audiences across the country. Michael’s Washington Journal segment below, recorded for C-Span earlier this month, provides a good preview of what he’ll be talking about next week.

I hope you’ll be able to join us, either in Kansas City on March 25 at 5:30 pm at the Kansas City Club, or in St. Louis on March 26 at 5:30 pm at Saint Louis University. Both promise to be excellent events.

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