Page 410 – Show-Me Institute

Lower Gas Prices Produces Higher Spendable Income for Missourians

Posted on January 5, 2015January 13, 2026 by Rik W. Hafer

I hope you enjoyed the extra (and unexpected) gift of lower gas prices this recent holiday season! According to GasBuddy.com, gas prices in Missouri averaged about $1.90 a gallon during the first week of 2015. This is significantly below the January 2014 average of about $3.00. How does this drop in gas prices translate into spendable income for the average Missouri household?

To answer that question we need to make some assumptions. First, we need an estimate for miles driven. Using national driving data for 2014 from the U.S. Department of Transportation the average male aged 35-54 drove 18,858 miles. The average female in the same age group put 11,464 miles on the car. Adding two teenagers to our household increases mileage driven by 8,206 for a boy and 6,873 for a girl. All told, then, our average family of four put about 45,400 miles on their car(s). If we further assume that the cars driven by our family averaged 25 miles per gallon, our representative family bought 1,816 gallons of gas.

Now for the income effect. At the January 2014 price of $3.00 a gallon, our family would spend about $5,450 a year on gasoline. At the current price of $1.90 (and assuming they do not increase miles driven) their gas bill drops a whopping 37 percent to $3,450. If the average family of four in Missouri had an income of about $72,600 in 2014, an estimate based on updating the 2013 median family income figures from the U.S. Census, their $2,000 savings in gasoline expenditures is equivalent to a 2.75 percent increase in household income. Not a bad raise for our average Missouri family!

What brought about this unexpected windfall? Increased oil production in the United States has been one of the most significant developments leading to more competition in world oil markets. With OPEC’s control over oil prices curtailed, market forces have pushed oil prices and, therefore, gas prices down. Whether oil and gas prices remain at their current levels is unknown. What is clear, however, is that competition has once again benefited consumers.

Riding to the Hounds of Corporate Welfare

Posted on January 3, 2015January 13, 2026 by Brenda Talent

Oscar Wilde famously defined foxhunting as “the unspeakable in full pursuit of the uneatable.”

His quip aptly describes a sport popular in Missouri: The one that elected officials play when they use taxpayers’ money to support the growth of selected businesses or industries.

The attempt to single out economic winners through government planning and intervention is a dismal sport that can only end in disappointment and failure. The nutritional value of the object of the hunt may be safely described as zilch. If you eat the uneatable, you will only make yourself sick.

But you wouldn’t know that from the behavior of many of our elected officials of both parties.

Whooping and hollering, they ride to the hounds of corporate welfare—passing out hundreds of millions of dollars every year in targeted tax credits and other subsidies that go mainly to large and deep-pocketed corporations and a supporting cast of lawyers, developers, urban planners, and consultants.

In a recent report, the Mercatus Center at George Mason University identified Missouri as one of nine states that rank as “the corporate welfare kings of America.” According to Mercatus, Missouri has committed to more than $5.2 billion in subsidies to private businesses over the past couple of decades.

So how much good has being a “corporate welfare king” done for the people of Missouri? Has it made our state a magnet for growth and job creation?

Emphatically, not!

Over the last decade and a half, Missouri has lagged every other state in the nation but one in average annual economic growth.

In the 16 years from 1997 through 2013, real gross domestic product in the United States grew at an average annual rate of 2.23 percent. Meanwhile, Missouri grew at an average annual rate of just 1.08 percent—or less than half as fast as the national average. By this measure, Missouri ranked 49th out of the 50 states—just ahead of Michigan at the bottom of the barrel.

There are two things that typically can happen with taxpayer-assisted commercial developments—both bad.

The first is the support of bad ideas that would never get off the ground without the helping hand of government, such as the now-bankrupt and disbanded Mamtek artificial sweetener plant that was supposed to provide 600 jobs in Moberly. The CEO of Mamtek was recently sentenced to a seven-year prison term.

Second is wholly unnecessary pump priming at taxpayer expense. In our state, Tax Increment Financing (TIF) is commonly used to “induce” powerful companies and their allies in commercial development to do things they would do anyway, such as opening new stores or building more opulent corporate headquarters.

To cite two recent examples of the abuse of TIFs, Kansas City and the state of Missouri are prepared to pick up $1.6 billion out of the $4.3 billion cost of building a brand-new and super-deluxe corporate campus for the Cerner Corporation. If Cerner needs a corporate pleasure dome, it should pay for it on its own nickel.

Another egregious example of a private development that does not require or deserve public assistance through the grant of what amounts to a tax holiday from the property and sales taxes that apply to other businesses is the Whole Foods Market and high-rise apartment complex that is going up in Saint Louis’ trendy Central West End.

If Missouri wants to stimulate growth and job creation, the first step is to put a stop to corporate welfare, including the $400 million in targeted tax credits earmarked for commercial development that the state hands out on an annual basis. And that dictates the next step, which is to return the money to the people who earned it—through cuts in the state income tax.

Brenda Talent is the CEO at the Show-Me Institute.

New Year’s Resolutions for Missouri Lawmakers

Posted on January 2, 2015January 13, 2026 by Darin Morley

As first appearing in the St. Louis Post-Dispatch:

Are you listening, Missouri lawmakers? This is the Ghost of Christmas Past. I am calling on you to mend your ways and adopt a whole new set of economic policies to replace the failed policies of the past two decades.

Yes, my friends, it is time for you to admit that what you have been doing—in spending billions of dollars of taxpayers’ money to subsidize commercial projects for the benefit of big, cash-rich companies such as Boeing, Cerner, Capri Casinos, Wal-Mart, and Whole Foods—has been a ghastly mistake.

In the 16 years from 1997 through 2013, Missouri has trailed every other state in the nation but one in average annual economic growth. Missouri ranked 49th out of the 50 states in growth of state gross domestic product—just ahead of bottom-dwelling Michigan.

And that is despite (or, I would say, because of) the fact that you have turned Missouri into one of the nine states considered the “corporate welfare kings of America.” According to the Mercatus Center at George Mason University, Missouri has committed more than $5.2 billion in state and local subsidies to private businesses over the past two decades. That is more than all but eight other states.

What else can I say to convince you of the urgent need for change? Well, perhaps some specific suggestions would help.

Here are five New Year’s resolutions for making Missouri a better place to live and work and grow a business:

Stop putting the public sector cart in front of the private sector horse. That is to say, begin with the recognition that all the private sector really needs to create wealth and jobs is competition and freedom of choice. It doesn’t need central planning and controls, which have the opposite effect of stifling individual initiative and economic growth.

Abolish the Missouri Department of Economic Development (DED) and return the money that the DED passes out in targeted tax credits for economic development (about $400 million a year) to everyone (not just the politically selected few) through broad-based cuts in the state income tax for individuals and businesses.

Take advantage of a wealth of opportunities across the state to enlarge the private sector and shrink the public sector through privatization. That is what Arnold did recently in selling its publicly owned and operated sewer system to a private contractor for $13.2 million—allowing the city of 20,000 people to pay off $8 million in sewer bonds and devote another $5.2 million to other public improvement. Better yet, under private ownership, the sewer system will go on the tax rolls and help pay for schools and other public services.

Make greatly increased use of tolls on Hwy. 70 and other major roadways and bridges. Tolls are an extremely efficient tax, and—as a result of new technology—they are readily collectible without toll booths or other inconvenience to people using the roadways. In fact, through variable tolls, the Missouri Department of Transportation could—at minimal cost—guarantee drivers congestion-free traffic flows at all hours of the day on major roadways and bridges.

Finally, look to what neighboring states are doing in reorienting their tax structures and put Missouri in the forefront of states that are pursuing pro-growth, pro-economic freedom reforms.

In the Christmas spirit, I urge you to make all those changes—knowing that you will wake up shortly wanting to fix the problems that have kept Missouri from reaching its full potential.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute.

Toll Possibilities for I-70 Rebuild

Posted on January 2, 2015January 13, 2026 by Joseph Miller

Recently, the Missouri Department of Transportation (MoDOT) issued a report on the possibilities of using tolls to pay for the expansion of I-70 from Wentzville to Independence.

As we have argued in the past, using tolls to pay for the improvements of highways is both fair and economically sound. Tolling allows all users of I-70, whether Missourian or non-Missourian, commuter or trucker, to jointly invest in a modern highway.

The new MoDOT study suggested that a plan to expand I-70 to three lanes across the state could cost $2 billion, far beyond the current resources of the department. However, the project could be financed with toll revenue and quickly implemented with the use of a public-private partnership (PPP). There are many varieties of PPPs, but they generally devolve some combination of the construction and operation of public assets to the private sector. If well designed and properly enforced, PPPs can deliver service that is both high quality and low cost.

While we may have issues with the scope of the I-70 project and how tolling is implemented, the fact that Missouri is getting serious about using PPPs and tolling to improve the highway system is to be lauded. More on this to come.

Map Series: VIII. The Kansas City Streetcar and Tax Abatements

Posted on January 2, 2015January 13, 2026 by Joseph Miller

The map above shows the route of the Kansas City Streetcar (under construction), as well as tax abatements enacted by Kansas City from 2011 to 2013. As the map demonstrates, this area of downtown, and particularly the area around the proposed streetcar, has seen the ample use of these tax breaks. Although city leaders and news outlets claim the streetcar creates development, these tax abatements and a combination of other planning factors that favor this small section of downtown may be diverting development. Read more from the Show-Me Institute on the Kansas Streetcar and tax abatements here.

A Look Past Gone Girl Excitement Reveals a Raw Deal for Missourians

Posted on January 2, 2015January 13, 2026 by Jessica Stearns

As first appearing in the Southeast Missourian:

Last fall, when Gone Girl began production, Cape Girardeau descended into a starstruck madness. All talk focused around the movie and the stars; Facebook and Instagram became flooded with celebrity sightings. I don’t blame locals for their enthusiasm of hosting a movie star like Ben Affleck and being the center of a major film production, but I do think it is more than a little ridiculous that Missouri taxpayers will be stuck with a $2.36 million tax bill to pay for this fleeting moment in the presence of Hollywood stars.

Taking advantage of the Department of Economic Development’s (DED) Film Tax Credit program before it expired in November 2013, the producers of Gone Girl received $2.36 million in tax credits from the state to offset the cost of production and taxes on income and payroll. Tax credits are dollar-for-dollar reductions in a tax filer’s tax liability, meaning that every dollar of “credit” given by the state for projects like Gone Girl ultimately results in a dollar less in revenue to the state, which could pay for schools and other taxpayer needs.

Don’t be fooled by reports that these credits pay for themselves. The truth about film tax credits is that they bleed taxpayers to subsidize an industry that last year brought in $36 billion in revenue worldwide.

Take, for example, the $3,262 in DirectTV charges for the installation of satellite TV in the hotel rooms of Affleck, director David Fincher, and other highly paid Hollywood producers. Or try the subsidization of a movie star’s hotel room. Then there is the $70 massage Rosamund Pike received courtesy of taxpayer dollars. And, my personal favorite, $650 for an espresso maker for the cast and crew. Agreeing to these tax credits means taxpayers end up paying for outlandish expenditures that benefit Hollywood rather than Missourians.

Despite the ridiculous expenditures subsidized with taxpayer dollars, tax credits still don’t meet the basic tenets of their purpose. Take the promise of job creation for example. At the price of $2.36 million, each of the 116 Missourians hired for the production of Gone Girl should have a job that pays $20,344 for an entire year. Looking at the payroll of the production, none of these reported job positions were full-time or high-paying, and not a single Missourian is still employed in the same capacity. Furthermore, a closer look at their payroll reveals that many of the “jobs” created by the film went to out-of-state employees, businesses, and contractors—not Missourians.

Why doesn’t this tax credit work? Because Missouri does not have the proper infrastructure to support film production. Missouri has to compete with the 40 other states that have similar programs, but with much higher tax incentives. When faced with competition from states like New York and Louisiana who have hundreds of millions of dollars in film tax credits, Missouri can’t afford to compete in this race to the bottom.

Having lived in Southeast Missouri for the majority of my life, I can understand the thrill that the production of Gone Girl brought to the area. But the ugly truth is that these film tax credits don’t provide the jobs and economic growth that Cape Girardeau and Missouri need. Let’s leave Hollywood in California so that Missourians don’t have to finance celebrities’ espressos or massages and focus on attracting businesses and investors to Missouri that won’t leave taxpayers to foot the bill.

Jessica Stearns is an intern at the Show-Me Institute.

Map Series: VII. Second Most Used Transportation Mode for Commuting in Saint Louis, After Cars

Posted on December 29, 2014January 13, 2026 by Joseph Miller

The map above shows the second most used transportation mode for commuting to work in the Saint Louis area census tracts, after cars. As the map demonstrates, for much of Saint Louis County and a few parts of the city, working from home (or telecommuting) is the most used mode for commuting after cars. In much of the city and North Saint Louis County, transit is the second most used. However, in the city’s central corridor, where transit is most abundant, the dominant mode of getting to work (after cars) is actually walking, not transit. Read more from the Show-Me Institute on transit and commuting in Saint Louis here.

Map Series: VI. Second Most Used Transportation Mode for Commuting in Kansas City, After Cars

Posted on December 27, 2014January 13, 2026 by Joseph Miller

The map above shows the second most used transportation mode for commuting to work in the Kansas City area census tracts, after cars. As the map demonstrates, for much of the city and surrounding counties, working from home (or telecommuting) is the most used mode for commuting after cars. In much of the center west of the city and southern Clay County, transit is second most used. However, in the city’s downtown area, where transit is most abundant (and the streetcar is opening), the dominant mode of getting to work (after cars) is actually walking, not transit. Read more from the Show-Me Institute on transit and commuting in Kansas City here.

Map Series: V. Saint Louis Area Travel Time to Work

Posted on December 26, 2014January 13, 2026 by Joseph Miller

The map above shows the mean travel time to work in minutes for residents of Saint Louis City and County census tracts. The lighter the color, the lower the average commute time, and vice versa. The map shows how travel times tend to be shortest in the central corridor and in the county along Route 67. The longest travel times are in North Saint Louis City and the fringes of Saint Louis County. While the distance from major work centers makes the later fact unsurprising, North Saint Louis City’s mean travel times may come as a surprise to some readers. The reason is that many North Saint Louisans are transit-dependent, which results in much higher commute times than those who drive personal vehicles to work. Read more from the Show-Me Institute on Saint Louis transportation here.

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