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Could The Tax Credit Bar For A ‘Solid Investment’ Be Any Lower?

Posted on February 7, 2013May 5, 2026 by Patrick Ishmael

Former Missouri Sen. Jeff Smith wrote in an op/ed published in the St. Louis Post-Dispatch last week that the “conventional wisdom” about the Low Income Housing Tax Credit (LIHTC) is wrong — that the LIHTC is not in fact a wasteful state boondoggle, but a “solid investment for taxpayers.” I have written about the LIHTC, and suffice to say, I disagree with him.

Of course, as the executive director of the Missouri Workforce Housing Association, Smith certainly has an interest in pumping up the program. According to the MOWHA website (emphasis mine):

The mission of the Missouri Workforce Housing Association (MOWHA) is to have a sustained effort influencing positive workforce housing policy at the federal, state, and local levels. We work with the Missouri Housing Development Commission (MHDC), the Affordable Housing Assistance Program (AHAP), Low Income Housing Tax Credits (LIHTC) . . .

The concern about tax credits such as the LIHTC is not just their potential for growth, but their costs and benefits. The LIHTC regularly clears more than $100 million from the state’s budget each year. The taxpayer benefit? Eleven cents on the dollar — a massive net loss to the state with every LIHTC project it subsidizes. If that is a “solid investment,” what isn’t?

Missourians would be better served with state policies that benefit all businesses through low, stable tax rates. It would be best served by the elimination of taxes on businesses entirely, a reform other states are already pursuing. That is a solid investment worth pursuing.

Moving For A Quality Education

Posted on February 7, 2013May 5, 2026 by James V. Shuls

Randy Georges Sr. knows something about school choice. He moved from the Tortola, British Virgin Islands to Missouri to obtain a quality education; now, he may have to move across town so Randy Jr. can have the same opportunity.

Like most concerned parents, Randy and his wife, Monique, have high hopes for their children and believe education is the path to success. Unfortunately, their house is zoned for one of the lower performing schools in the Springfield School District. They tried to use the district’s intra-district choice program, to no avail. Lacking other options, the family was forced to send their son to Bingham Elementary, where only one-third of all students are reading on grade level.

They could apply for the transfer program again next year, but success is not guaranteed; so the Georges family is analyzing all other options, including moving again. This situation is not unique; families across the state grapple with this very issue every year. They can either accept a sub-standard education for their children, struggle to pay tuition, or move. This is a shame, especially when it does not have to be this way.

In conversations with individuals from 10 private schools in Springfield, I discovered that there are more than 500 available spaces. The Georges family lives just a block from one of these schools.

When former U.S. Secretary of Education Rod Paige was superintendent of the Houston, Texas, school district, he offered some of the students the ability to attend a private school at the district’s expense.

At the time, Secretary Paige’s actions were a novel idea, but today, many states are following suit. According to the Center for Education Reform, there are now 25 programs in 14 states that enable students to attend private schools with a voucher or a tax-credit scholarship. Additionally, Arizona has instituted a first-of-its-kind program, education savings accounts, which can be used to pay for private school tuition or a host of other educational services or products.

These programs provide families with options, typically at a cost savings for the state. Take Springfield, for example: tuition at the private schools I spoke with was $3,300 less than the amount the Springfield School District spent per-pupil last year. Mind you, that figure does not even include the district’s expenses for facilities. A program that enables students to fill those 500 open spaces in the private schools could save the district more than $1.6 million. Moreover, it could ease some of the overcrowding problems in the district.

The idea of public dollars going to private schools is not popular to some, but the idea that the only way to get a good education is to live in the correct ZIP code or be able to afford private school tuition should be even more reprehensible. Providing families with options is not a private versus public issue; it is an issue of doing what is right.

James V. Shuls is the education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Where Success Comes Before Work

Posted on February 6, 2013May 5, 2026 by Kacie Barnes (Galbraith)

Derek Weber is a man with big ideas. He is president of goBRANDgo!, a marketing agency that aims to “empowergize” entrepreneurs.

Armed with a plan to create a nonprofit incubator for startups, Weber approached Saint Louis agencies to turn the former Shepard Elementary School (3450 Wisconsin) into “a kind of entrepreneurial theme park” called The Conflux. According to Weber, “the only way to make [it financially feasible] . . . is through a combination of city, state, and federal tax credit programs.”

Is this really the only way? What about looking for investors and potential donors, exploring less costly options, or evaluating the demand for his project?

Helping entrepreneurs is indeed a noble pursuit, as they help our economy grow. But I find it inconsistent to be a strong supporter of entrepreneurs, yet act in a way that violates the true spirit of entrepreneurship. What sort of example would this publicly funded “entrepreneurial theme park” be setting for the entrepreneurs The Conflux intends to help?

This is a clear indication that our society continues to become more reliant on government assistance every day. Why else would a man who so ardently supports entrepreneurship insist that his nonprofit can only work if it has government support? Superfluous city, state, and federal government tax credit handouts perpetuate a culture that feels entitled to government aid. Still, there are countless nonprofit organizations that rely on hard-earned donations from individuals and organizations. These nonprofits work tirelessly to raise money to support a cause in which they believe — they do not simply rely on the government to fund their mission.

And most nonprofits would likely agree with Vince Lombardi when he said, “the only place success comes before work is in the dictionary.” But evidently, success also comes before work when you go seeking government subsidies.

Part 2: It Is Time To Close The Book On Aerotropolis

Posted on February 5, 2013May 5, 2026 by Patrick Ishmael

Last week, I noted that Aerotropolis is back in the legislative conversation as supporters try (again) to direct state subsidies to the Lambert-St. Louis International Airport-based project. Along with expressing our skepticism of the project’s economics, we have long-criticized the economic puffery surrounding the idea of Aerotropolis in Saint Louis. The Missouri Legislature opted not to give the project money in 2011 and again in 2012.

Yet public money has already gone toward Aerotropolis. Last year, Saint Louis County officials diverted $3 million in gambling tax revenues to support Aerotropolis. At the time, Lambert’s director, Rhonda Hamm-Niebruegge, told the St. Louis County Economic Council that with the gambling money (emphasis mine),

We are ready to go. . . . These funds put the muscle into our argument that St. Louis is the right place to move cargo around the world. We have capacity and we are happily uncongested, unlike most other United States cargo hubs, such as Chicago and New York.

What happened to the money? The St. Louis Post-Dispatch reported that not only did the original funds go unused, but that the airport is now gunning for a new $60 million cargo tax credit.

Last year, St. Louis County established a $3 million fund to subsidize cargo flights, but it has not been used. Airlines, say Hamm-Niebruegge, worry that they would burn through that pot too quickly; having a program worth $7.5 million a year for eight years will give the effort more staying power.

“It’s so critical for us to have a long-term view,” she said.

To summarize:

In 2012, $3 million in casino taxes “put the muscle into [the airport’s] argument that St. Louis is the right place to move cargo around the world.”

In 2013, not only was there such a lack of interest in the Saint Louis Aerotropolis project that no private actors drew on the money, but the airport says it needs more money. . . by a factor of 20.

If they have not already done so, policymakers have to ask themselves now: When will the Aerotropolis reality live up to the Aerotropolis rhetoric? Will it ever?

The fact is, Missouri’s economic development projects oftentimes live and die based on the promises supporters make, rather than the results they produce. Aerotropolis is simply a giant, tottering example of this unfortunate state of affairs. Now on its third time before the legislature and after literally years of puffery, it is time for Missouri to close the book on Aerotropolis and, more generally, other “big promise” tax credit projects. There are better ways to promote economic growth in Missouri. This is not it.

McGraw Milhaven – David Stokes on KTRS

Posted on February 4, 2013May 5, 2026 by David Stokes

David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program. In this appearance, Stokes and the host discuss topics such as the Missouri road funding foofaraw, the nuts and bolts of transportation funding bonds, which funding methods make the most sense, whether a gas tax is a form of social engineering, the funding of the Saint Louis Zoo, how charter schools might improve education on the whole.

View the video here:

Memo To The Post-Dispatch: Taxes Kill Growth

Posted on February 4, 2013May 5, 2026 by Patrick Ishmael

The St. Louis Post-Dispatch published an editorial this weekend that attacked the Show-Me Institute and one of its founders, Rex Sinquefield, calling Show-Me a “believe-tank” (contrast to “think tank”) whose purpose is to propagate the “free-market gospel” of Mr. Sinquefield. Presumably a follow-up to a story published last week in Gateway Journalism Review (GatewayJr.org), the Post-Dispatch’s editorial exhibits the sort of ill-considered economic assessments that have become the hallmark of Saint Louis’ daily in recent years. The Editorial Board’s latest addition to this unfortunate pantheon can be read here.

But the Post-Dispatch’s readers deserve better than what the newspaper delivered Saturday. There is nothing “theological” about the proposition that income taxes are destructive to growth. For the sake of transparency, I encourage the Post-Dispatch to point its readers to a report summarizing the academic literature on taxes and growth that the Tax Foundation published last year. Notably (emphasis mine):

So what does the academic literature say about the empirical relationship between taxes and economic growth? While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.

The Show-Me Institute will continue to advocate for substantive reforms to improve the economic fortunes of this state. Instead of deriding that movement, the Post-Dispatch should join the good-faith effort — which a constellation of countless citizen activists are spearheading in Missouri with assistance from Show-Me Institute research — to translate the outcomes of decades of economic research into a robust and prosperous economic reality. We invite the Post-Dispatch to join us in this pursuit.

Early Childhood Education Funding

Posted on February 3, 2013May 5, 2026 by James V. Shuls

The St. Louis Post-Dispatch editorial board recently wrote a piece in favor of spending more money on early childhood education. The board noted that many states are cutting early childhood funding and declared, “This is a step backward, and it goes against all of the academic evidence on the subject. Study after study has shown that spending money on early childhood education is one of the best investments a parent or a state can make.”

There is just one problem with this statement: it is wrong, or at least misleading. For starters, the study referenced in the editorial suggested we could expect an $8 return on every $1 invested in early childhood education. The results they are citing come from a 1960s study that has been wrought with criticism. Moreover, the pre-school program in the study does not even resemble most of today’s early childhood education programs.

A good example of a failed modern early childhood program is Head Start. A recently released U.S. Department of Health and Human Services study of Head Start found that academic gains do not last, fading out by third grade. Add that to a growing list of evaluations of Head Start that have the same findings. The Wall Street Journal editorial board concluded that Head Start “. . .wastes taxpayer dollars at a time when the country is running trillion-dollar deficits.”

The evidence is simply not as clear as the editorial board has made it out to be.

Where Does The Money Go?

Posted on February 1, 2013May 5, 2026 by Kacie Barnes (Galbraith)

We all know that corruption is a threat to our government. And, the less transparent a governmental body is, the more likely it is that corruption will occur. Aren’t we all more likely to steal the last cookie if no one can see us doing it?

The U.S. Public Interest Research Group (PIRG) revealed unsettling results for Saint Louis in its report on the largest cities’ spending transparency websites. Saint Louis City received a grade of ‘F’ in spending transparency, and ranked 28th lowest on the list of 30 cities.

Other cities provide valuable “checkbook-level” information online. But Saint Louis fails to provide this information, keeping us in the dark on expenditures. This means we cannot easily track who receives taxpayer dollars.

Tax Increment Financing (TIF), tax credits, exemptions, incentive-based abatements, and other tax subsidies all affect the city’s budget the same way as direct spending. But cities can more easily hide these types of indirect spending.

The Saint Louis Development Corporation (SLDC), which supports the city’s TIF commission, provides almost no TIF information on its website. And, the SLDC fails to provide financial information for the other economic development authorities it supports.

As a result, it is challenging to track the details on Saint Louis tax expenditures. And if we cannot easily track spending details, we have a limited ability to hold recipients accountable for delivering on their promises. Without providing this information online, it is unnecessarily difficult to scrutinize the city’s decisions and to determine whether our tax money is being spent wisely.

No one could argue that this is a good thing — yet we see no attempts from Saint Louis City to provide more transparency.

Mo’ Money Will Not Solve MO Problems

Posted on February 1, 2013May 5, 2026 by James V. Shuls

Wouldn’t it be nice to have a lot of money? So much money that you could do everything you want to do without worrying about the cost. Of course it would, and it would also be nice to have a unicorn; but we live in the real world, with resource constraints. For most of us, that means making decisions about what works best and putting our money into those things, rather than wasting our money on things that do not work. The one thing we know from the field of education is that what we are currently doing has not been working and we cannot afford to continue down the same path. Rather than throw good money after bad, we need to rethink how we operate public education in Missouri.

By many measures of academic achievement, Missouri ranks near the middle of the pack when compared to other states. On the best state-to-state comparison, the National Assessment of Educational Progress (NAEP), Missouri fourth graders ranked 28th in math and 32nd in reading in 2011. Missouri’s eighth-grade students ranked 33rd and 25th in math and reading, respectively. At the high school level, the state’s average ACT score has remained unchanged at 21.6 for the past eight years.

We are stuck in the middle with no signs of becoming “un-stuck.” Using data from NAEP and several international comparison tests, notable education scholars Eric Hanushek, Paul Peterson, and Ludger Woessmann analyzed national and state level trends in achievement. They found United States performance to be middling in comparison to other countries. From 1995 to 2009, 24 countries had educational gains larger than the United States and 24 had smaller gains. In their analysis, Missouri once again appears average when compared to other states, ranking 27th in the annual rate of growth in math, reading, and science achievement. Missouri does not seem to be improving rapidly in comparison to other states or other countries.

The answer to our apparent inertia is not simply more money. Many rigorous studies have shown, including the one cited above, that increased funding simply does not buy higher achievement. From 1992 to 2008, real per-pupil spending on K-12 education increased by nearly 40 percent. Last year, Missouri spent approximately $9,600 per student. For a class of 25 students, that equals $240,000. And that figure is just for current operating expenditures, which typically does not cover the cost of buildings and classrooms. For the 2013 fiscal year, spending on elementary and secondary education will consume more than 36 percent of the state’s general revenue operating budget.

Freedom, not money, is the answer to Missouri’s education problems. Our education system is rife with burdensome regulations and limitations that inhibit teachers and school leaders from addressing the most pressing needs at their schools. At the same time, most families lack the ability to express any meaningful choice in where their child goes to school. We need to allow school officials to innovate and we need to empower families to choose.

The state cannot afford to continue the path we are on, but we can certainly afford to dole out more freedom. Arizona lawmakers have discovered a way to promote freedom while saving money, with the use of education savings accounts. Families who wish to homeschool or place their child in a private school can now receive a portion of the funds that would have been spent on their child. They can use these funds for approved education purposes, including textbooks, tutoring, and even tuition. Because students only receive a portion of the funds, the state saves money and families have more options. In my book, that is a win-win.

James V. Shuls is the education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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