David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program.
Among the topics discussed in this appearance: the Supreme Court decision regarding the Affordable Care Act, the possibility of Saint Louis city and county sharing police resources, Schlafly Brewery’s urban farm proposal (and its tax implications).
David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program.
Among the topics discussed in this appearance: Auditor Schweich’s report on the Missouri Department of Economic Development, problems with tax credits generally, water pricing during a shortage, imposing water meters on residents of the city of Saint Louis.
The Show-Me Institute has written extensively about the negative effects of Tax Increment Financing (TIF), yet cities in Missouri continue to provide us with cases of TIF failure. The city of Richmond Heights, for example, is pursuing plans to redevelop the Hadley Township area just south of Hwy. 40 and east of Hanley Road using TIF to attract potential developers. The real kicker: This will be the fifth attempt in 10 years to redevelop the low-income neighborhood into a commercial area.
Usually when we write to warn cities about the dangers of TIF, we urge them to consider the failures in other cities or other developments. Officials in the city of Richmond Heights need not look past the city’s own history and, in fact, the history of this particular development. Developers have had their eye on the area since the late 1990s, and two of the proposals (from Michelson Commercial Realty in 2006 and United Plaza in 2010) seemed like they might actually get off the ground before collapsing, mostly due to the state of the economy following the 2008 crash. Now, Richmond Heights is at it again, enticing Pace Properties and Menards with promises of substantial amounts of TIF ($27 million and $24 million, respectfully).
The interesting thing about Hadley Township is that it is not an example of TIF having a negative impact on an area because it cost taxpayers millions and showed less-than-impressive returns — though that is exactly what could happen if the current plans move forward. Instead, this is a case of a city dangling TIF like a carrot in front of developers but failing to complete any of the proposals brought forth. This has left homeowners in limbo; many have moved on or let their homes fall into disrepair because of rumors that they will soon be bought and torn down. It seems like a dismal outlook for the area — either taxpayers are on the hook for more than $50 million of the developments or the neighborhood is left in the blighted state it has reached because of the failures of the past decade. There is, however, a third option: Ditch the TIF and encourage private developers to take advantage of the fact that many of the residents are willing to sell. Private developers, not TIF, could provide the solution that the residents of Hadley Township have been seeking for so long.
The Heritage Foundation recently released a study illustrating the impact by state and congressional district of the forthcoming “Taxmageddon.” The U.S. economy faces a $494 billion tax increase due to the expiration of several tax cuts, including the Bush tax cuts and payroll tax cuts. Thus, the U.S. faces a massive tax increase on January 1, 2013, unless the law is changed.
The typical family faces a tax increase of $4,138. Low-income workers face an average tax increase of $1,207 while the average retiree faces an $857 increase.
As a whole, Missouri will face an additional $7,858,563,552 in increased taxes, which amounts to $2,634 per tax return. Here is the impact of the upcoming tax hikes on taxpayers in each Congressional District in Missouri:
The prospect of further tax hikes threaten to weaken an already stagnant economy. Policymakers have a diminishing window of opportunity to stave off these looming tax increases.
The Supreme Court has made their decision regarding the constitutionality of Obamacare. Show-Me Institute Executive Director Brenda Talent explains what this ruling means for all Americans.
I want to highly recommend this piece by Ingram’s Jack Cashill about privatizing the water system in Kansas City. Cashill makes a number of great points, and I love the opening lines:
Somewhere in the world, I am sure, a government bureaucracy manages a utility more economically and efficiently than a private company could.
When you find that “somewhere,” you are in for a treat. For there, too, you will find unicorns, Bigfoot, pretty lasses singing “Brigadoon,” Elvis performing live, and light-rail lines that actually pay for themselves.
Kansas City has a great opportunity to work with the terrific private engineering companies in the city and with American Water to turn over management of its water and sewer systems to private entities. They can do this either through an auction (sale), through a management contract, or many other variations or combinations. I hope this issue keeps getting strong consideration in Kansas City.
Thanks to Tony’s Kansas City for the original link.
The Missouri State Auditor recently released a report on the Missouri Quality Jobs Incentive Program and the results are not good. The audit:
(1) determined that due to weaknesses in program data, program effectiveness and efficiency could not be determined, (2) identified deficiencies in internal controls, (3) identified noncompliance with legal provisions, and (4) identified the need for improvement in management practices and procedures.
Needless to say, the auditor rated the overall performance of this program as poor. I am not really shocked that an economic development program that the state administers is run poorly. If I am surprised about governmental incompetence, I am in the wrong line of work. However, even when it is clearly demonstrated that another government-run program is not working, legislators refuse to do anything about it. It seems Ronald Reagan was right when he said the closest thing to eternal life on earth is a government program.
I know I am starting to sound like a broken record, but the state should eliminate economic development tax credits and the corporate income tax. Not only would this abolish ineffective programs like the Quality Jobs Incentive Program, it would be fairer to everybody. The government would not be in the business of picking winners and losers and it would benefit all corporations instead of a select few.
The auditor’s report is the latest in a growing pile of evidence that tax incentive programs are not working. If the state really wants to make a positive step toward renewed economic growth, it should eliminate the corporate income tax.
In their struggle to pull Missouri out of the economic doldrums, policymakers in Jefferson City have proposed expanding a tax break for small businesses that add jobs. Now, this law is not exactly horrible. Worse things have come out of Jefferson City, such as Mamtek, but considering that Kansas is cutting income rates by a significant amount, isn’t this action a little weak in comparison?
Like it or not, Missouri competes with other states. The tax incentive situation in Kansas City is a perfect example of such competition. The excise tax situation in Illinois is another. Yet when Kansas enacts a large tax cut, Missouri expands a tax deduction. No wonder Missouri is doing so poorly economically.
The Show-Me Institute has discussed the benefits of eliminating the state’s personal income tax. My colleague Patrick Ishmael and I have argued for the state to completely eliminate the state’s corporate income tax and make up any lost revenue with the elimination of economic development tax credits. Both courses of action would benefit the state’s economy. Both ideas would provide a more robust response to the actions of our neighbors. Yet, in Jefferson City, it is business as usual.
Missouri has the chance to rev up its economic engine. In order to do so, it has to change the way it thinks about competing with other states and move toward more significant policy initiatives that will boost growth.
Today is my last day at the Show-Me Institute. Beginning in July, I will be working for the Mackinac Center for Public Policy, Michigan’s state think tank. While I am excited to return to my home state, I will miss Missouri greatly.
Four years ago, I began at the Institute as an intern, filing hundreds of information requests for school superintendent contracts. I have been fortunate to work with talented and principled co-workers who are passionate about making Missouri a better place to live, work, and start a business. During my time in Missouri, I have learned enough about state and local government to convince me that Ron Swanson is the ideal public official.
At the state and local government level, disinterest allows for the slow deterioration of liberty. Tax credits, for example, can be a very dry subject. But because tax credits are frequently misunderstood, or even ignored, state politicians have gotten away with handing out hundreds of millions of dollars to favored individuals and businesses. Occupational licensing might sound boring, but that is a way the state can make it needlessly difficult for individuals to work.
The same disinterest applies to city government. Few pay attention to the variety of small government meetings in Saint Louis City. But those meetings are where decisions are made to limit where we can eat, limit what we can do with our homes, and limit who can purchase vacant city property. Officials have even paid companies to leave the state. It sounds like a plot from an episode of Desperate Housewives, but it really is true that in Saint Louis City, you can get in trouble for using the wrong trash bins.
I hope Missourians will continue to monitor their elected officials and to ask critical questions about government action. Small and petty people will use government for their small and petty means. Even if you happen to prefer lower grass height, fewer food trucks, or would like to see one building replaced with another, it is important to remember that next time, those powers may be used to accomplish something you find abhorrent.
Instead of hoping that one political party or another prevails, I prefer that government’s power to control our lives be reduced. There are a lot of great, dedicated small activist groups here, and I hope they continue (and succeed) to reduce the size of government.
I am confident that my colleagues at the Show-Me Institute will continue to fight for liberty in Missouri, and I wish them all the best.
