Page 583 – Show-Me Institute

Gasoline, Cigarettes, Alcohol and Taxes: When Less Is More

Posted on December 15, 2011May 5, 2026 by David Stokes

Do people visiting Missouri take advantage of the Show-Me State’s lower excise taxes? Right now, the state of Missouri earns tax revenue by having comparatively lower tax rates than neighboring states. Lower tax rates lead to lower prices on gasoline, tobacco, and alcohol — and Missouri’s many regular visitors can and do take advantage of this.

In this video, the Show-Me Institute’s David Stokes and Amy Lutz interviewed several Chicago Blackhawks fans visiting for a Saturday night hockey game against the Blues. Many, but not all of them, knew that Missouri’s tax rates were lower. But after learning of the lower tax rates, all of them planned on purchasing items such as gasoline while in town.

Lower taxes can lead to higher revenues — and keeping taxes low will keep the money flowing into the state of Missouri.

The Gateway City, The ‘Possibility City,’ And Hope For The Future

Posted on December 14, 2011May 5, 2026 by Patrick Ishmael

The guard is changing at Saint Louis’ regional chamber of commerce, the St. Louis Regional Chamber and Growth Association (RCGA).

Dick Fleming, the group’s longtime head, is stepping down from the organization he has helmed since 1994, and his replacement will come from a city just a short drive east on I-64: Louisville, Ky., also known as the “Gateway to the South.” Joe Reagan moves to Saint Louis from Louisville’s equivalent of the RCGA, the Greater Louisville Inc., or GLI. Marketed during Reagan’s tenure as “Possibility City,” Louisville will have to find a new chamber head for the first time since 2005. Louisville is already writing the postscript to Reagan’s legacy.

But the fact of the matter is that no man, or government, or organization, or even coalition of organizations, can plan an economy, or at least plan it well. That is an incredibly important point to highlight and probably the fairest thing that can be said as Reagan joins the Saint Louis community; it also is probably one of the most damaging points one can raise about how the RCGA and organizations like it behave.

Our local chamber loves to get the pat on the back for positive economic news and to pump “public-private partnerships,” oftentimes fueled with tax credits, that fail to substantively move the economic needle in the region’s favor. Meddling in the economy, local or national, destroys wealth more often than it creates it, leaving taxpayers with the promise of prosperity but little else. And it is no secret that Saint Louis city has languished for decades under one failed economic plan after another, compounded by the exodus of residents into nearby counties and driven by the continued intransigence of the city’s political class to step away from its cronyistic tendencies. In short, the economic development status quo is not a blueprint for a prosperous future for this region, and has not been for some time.

Which is why I hope that Reagan’s arrival in Saint Louis is not just more of the same. More precisely, I hope that Saint Louis — and Kansas City, and the state of Missouri — at least return to some sense of regional economic normalcy, if not runaway growth in the coming year. That is a Christmas wish of sorts, I suppose, but a wish that the RCGA, GLI, or any similar organization has limited or no power to bring to fruition.

Maybe a New Year’s resolution for the state and the city is in order instead: To simply let the market work. It does not matter if it is Saint Louis’ chamber hawking Aerotropolis, or Moberly’s chamber hawking Mamtek, or a political class increasingly disconnected from the electorate hawking Solyndra. There are no easy, centralized solutions to our economic woes. Acting like there is in Saint Louis only prolongs the municipal pain. Like all taxpayers, Saint Louisans cannot depend on a small group of decision-makers to make their lives better.

Free markets make genuine and sustainable economic growth possible, and if there is going to be a “Possibility City” in this region, let it be more than just another marketing slogan with another cartridge of development silver bullets as its driving force. Reduce taxes and regulation, get out of the way, and let the free market flourish. May RCGA’s new administration regain its faith in that formulation.

Show-Me Institute Book Club: Join Us This Wednesday

Posted on December 13, 2011May 5, 2026 by Greg Aubuchon

Frederic Bastiat once wrote:

Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on. All these plans as a whole — with their common aim of legal plunder — constitute socialism.

Provocative enough for your tastes? Do you vehemently disagree? Is Bastiat a kook? Come join us for spirited discussion and snacks this Wednesday; Bastiat is our topic.

The Show-Me Institute’s Book Club meets the second Wednesday of each month at our headquarters, located at 4512 West Pine Blvd. in the Central West End. Meetings begin at 7 p.m. and typically last until 8:30 or so. See link for more information.

Please bring a friend. Hope to see you there.

Stokes on Jaco Report – Minimum Wage

Posted on December 13, 2011May 5, 2026 by David Stokes

Show-Me Institute Policy Analyst David Stokes recently appeared on
Channel 2’s Jaco Report in Saint Louis in support of the idea that the
minimum wage is harmful for the Missouri economy. Appearing opposite Stokes and arguing in favor of the minimum wage was Lara Granich, Director of the Missouri Jobs with Justice coalition.

View the video on Fox 2’s website by clicking here.

Policy Study: The Impact of Missouri’s Proposed $6.50 Minimum Wage on the Labor Market

Commentary: Minimum Wage Hike Is Poorly Targeted at the Poor

Commentary: The Minimum Wage Hurts Those It Is Designed to Help

Ceux Subventionnes (The Subsidized Ones)

Posted on December 8, 2011May 5, 2026 by David Stokes

It is not our intention to be the Inspector Javert to the Jean Valjean of Winghaven, constantly chasing Paul McKee’s proposals around to criticize them like the fanatical French cop pursued the reformed Valjean. Nonetheless, bad proposals for Saint Louis keep coming from Paul McKee, and if it falls to us to keep saying “stop,” then so be it. (Thanks to johncombest.com for the link, and to Victor Hugo for the references.)

The latest proposal is to transfer the bottle district TIF (tax increment financing) from the original developers to the control of Mr. McKee and his entities. To be clear, McKee and his groups were not involved in the original TIF proposal, so we cannot pin all of this on him. However, unlike tax credits, the TIF law was not drafted with the intention of TIF being transferable. I do not think it is right for one stalled TIF proposal to just be assigned to someone else – and I do not care who that someone else is. (Note: I am not saying transfering the TIF is illegal, just improper.) At least some people in city government seem to be aware of this issue:

[Saint Louis Development Corporation Executive Director Rodney] Crim wouldn’t specify what, exactly, the city objects to. But he suggested officials have concerns about using TIF for one project to help fund another.

“My focus is on what can and cannot be done with the Bottle District TIF,” he said. “We just have some more talking to do.”

I think it is especially wrong to continue to subsidize property that at this very moment is being made more valuable because of major public improvements. Here is one description of the property:

Located just north of the Edward Jones Dome (home of the Rams) along Interstate-70, the site is one of the most desirable development locations left available Downtown. Once the new Mississippi Bridge is complete, its location next to the bridge will make the site even more visible and accessible than it already is.

Former longtime New York Sen. George Washington Plunkitt would have fully understood developers seeing their opportunities and taking them, but even he would never have asked for the new land to be subsidized on top of it. If this land at the base of a major new bridge has to be subsidized, I guess we are at the point where we just admit everything gets a tax subsidy, unless, of course, you are just a small entrepreneur without political connections.

A Heavenly Deal?

Posted on December 8, 2011May 5, 2026 by Michael Rathbone

Right now, if you are a St. Louis Cardinals baseball fan, you are probably in a state of shock, anger, or melancholic resignation. El Hombre has decided to leave Cardinal Nation behind for the riches of the Golden Coast. Yes, Albert will sign with the Angels. The deal reportedly is above the Cardinals’ latest offer (allegedly 10 years and up to $220 million) and from every indication, an unforgettable era in Saint Louis baseball is over.

Just how rich does this make Albert? Well, one local sportscaster estimated today that if Albert bats five times each game next year for the Angels, he will be raking in a cool $30,000 each time he steps into the batter’s box. Not bad, huh?

But if it makes you feel any better, it may not be all win-win for our legendary No. 5. Consider income taxes. Missouri’s top personal income tax rate is 6 percent, which kicks in at $9,000 (he would have also paid an additional 1 percent earnings tax [click on policy study and scroll down to page 46] in Saint Louis). In comparison, California’s top rate is 10.3 percent for incomes above $1 million (of course it might not STAY that way). I am not the only one to notice the possible influence that income tax rates could have had on Albert’s decision (this was regarding the offer from the Miami Marlins).

However, at the margins, how much of a difference would these tax rates have made on Albert’s decision? First, consider that Albert will only have to pay this 10.3 percent top rate for games played in California. He will play a good chunk of his games in states with NO personal income taxes (Washington and Texas). Now, I am not an economist and there are other factors involved here, but just doing some back-of-the-envelope calculations for the home games, I found that Albert would pay slightly more than $4.6 million more in taxes over the life of his contract in Anaheim than Saint Louis. Considering the supposed $30 million to $40 million difference in value of the contracts, would the tax factor make that much of a difference? It is certainly possible (even though Albert did decide to leave). If the Angels had offered him the same amount as the Cardinals, the tax difference would cost Albert approximately $3.7 million.

Who is to say if the difference would matter, especially for a single individual who has to weigh many factors in his decision to move. However, if you are a business, that tax difference could influence a decision between paying taxes or hiring a couple of new employees. Just some things to ponder while Albert packs his bags.

Sometimes Old Law Is Good Law

Posted on December 8, 2011May 5, 2026 by Greg Aubuchon

I once drafted a legal brief for the dismissal of a lawsuit. While the legal arguments were nuanced, the crux of my case rested on a single decision from the 1940s. This worried me, so I vetted the argument with a firm partner. His advice, after reading the brief: Sometimes old law is good law. My client won the motion and the case was dismissed.

The Missouri Supreme Court recently heard oral arguments in the case of American Federation of Teachers v. Ledbetter. At issue is whether a public school district has a legal “duty” to collectively bargain in “good faith” with a teachers’ union.

Back in 1947, the Missouri Supreme Court, in City of Springfield v. Clouse, held that Springfield could not collectively bargain employment contracts with public employee unions. The reason was twofold. First, the Missouri Constitution’s clause guaranteeing the right to collectively bargain did not apply to public employees. Second, public entities such as cities act on behalf of the general public and therefore only elected legislators, as the peoples’ representatives, may set the terms of employment for public employees. Non-elected public officers lacked the requisite authority to collectively bargain with labor unions.

Fast forward 60 years. In Independence-NEA v. Independence School District, the Missouri Supreme Court overruled Clouse and held that the collective bargaining clause extended to public school teachers. The court rested its opinion in large part on the modern trend recognizing a legislature’s power to delegate its decision-making authority to administrative agencies. Because a legislature “may” delegate its power to establish the terms of public employment, the constitution’s collective bargaining guarantee was held to extend to all public employees, including teachers.

But did the Missouri Legislature specifically delegate this authority to public school districts? And how can one reconcile the majority’s broad recognition of the power to delegate with its stern rejection of the legislature’s discretionary choice to exclude public school teachers from its grant of collective bargaining rights?

Specifically, the Missouri General Assembly enacted the Public Sector Labor Law in 1965. The Act empowers certain public employees to join labor organizations for the purpose of negotiating terms of employment. But the legislature expressly excluded school teachers from its provisions. By exercising its power to delegate, the legislature “selectively” delegated its powers by withholding collective bargaining rights from teachers. But does the power to delegate not imply the power to withhold?

Unfortunately, the court wants to have it both ways. First, the collective bargaining guarantee is extended to public employees because of the legislature’s broad power to delegate. Yet the legislature may not limit its delegation by excluding school teachers. The Court is torturing the constitution and the statutes to get the results it wants, wielding unauthorized power as a supervening legislative authority. Perhaps we should recall James Madison’s astute observation (quoting Montesquieu):

Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for THE JUDGE would then be THE LEGISLATOR.

Aubuchon is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.

A Tale Of Two County Executives (More Similar Than Different)

Posted on December 7, 2011May 5, 2026 by David Stokes

Last month, I attended a tax increment financing (TIF) commission meeting in Saint Charles. Last Wednesday night, I planned to testify before the Saint Louis County TIF commission meeting in Shrewsbury, until it was abruptly cancelled on short notice. Both meetings involved TIF applications for retail centers (among other things) in Saint Charles and Shrewsbury. Both are terrible ideas. Both have the support of cities seeking (understandably) their narrow self-interest over the interest of the county or region. The respective county executives oppose the two plans, although I must be clear that I know Saint Charles County Executive Steve Ehlmann opposes the Saint Charles plan and I believe Saint Louis County Executive Charlie Dooley opposes the Shrewsbury plan (based on history, which I will detail more in-depth later).

Ehlmann gave an excellent talk at the TIF hearing last month. Here is his stated opposition to the TIF:

However, he said a city tax-increment financing subsidy would be “bad public policy” because it would channel into the project some of the new property tax revenue generated that would otherwise go to the St. Charles School District and other governments.

“If the city can do a TIF to make others pay for what is their responsibility, when are we going to start using city money for schools?” Ehlmann said.

Ehlmann and his predecessor, Joe Ortwerth, have been leaders in calling out the fact that these TIFs do not do anything for our economy. They inefficiently redirect activity based on who is giving out the most tax dollars. Saint Charles County has put its money where its mouth is regarding TIF, and actively fought prior TIFs in court, although the rulings have always favored the cities. It is great to see Ehlmann is still fighting that fight against these abuses.

Charlie Dooley has also been leading the fight against these TIFs in Saint Louis County. He has not made a statement directly on the Shrewsbury TIF, so I do not know exactly how he feels about it. But based on his opposition to the last Walmart TIF in Bridgeton, and the comments of the county reps on the current TIF commission, I think he likely is opposed to this one as well. (Someone should feel free to correct me if I am wrong.) Dooley made public comments about the Bridgeton TIF between the TIF commission process and the city council decision. I think that is perfectly appropriate, and I hope he leads the opposition should the Shrewsbury City Council attempt to override the decision of the county TIF commission.

One of the most important legislative changes we need in Missouri is eliminating the ability of cities to override TIF commissions. Cities can approve a TIF even if the commission defeats it. That is an atrocious law that empowers small groups to abuse the tax system at the expense of many other people and entities (such as school districts). Both county executives – Ehlmann and Dooley – deserve great credit for thinking about their whole county (and region) first, and opposing these types of tax abuses.

Coal In The Stocking

Posted on December 6, 2011May 5, 2026 by Michael Rathbone

During this time of year, no one wants to say “Bah, Humbug!” However, I would be remiss if I did not mention that the state might run into a revenue shortfall (between $400 million and $600 million) next year. That can be troublesome, but it also presents an opportunity for the state to reexamine some of its questionable spending decisions. In previous posts, I have listed some areas where the state should reconsider spending money. However, for now, I will focus on the state’s support of the Missouri Agricultural and Small Business Development Authority.

The mission of MASBDA is to make “capital available to Missouri farmers, particularly independent producers; agribusiness; and small business at competitive interest rates on a scale to make a major impact.” This raises a red flag for me. An entity that makes capital available to businesses at a “competitive” interest rate sounds an awful lot like a bank to me. In fact, a couple of the programs that the MASBDA administers include: Missouri Agribusiness Revolving Loan Fund, Alternative Loan Program, and Animal Waste Treatment Loan Program. The total state funds loaned to the Animal Waste Treatment Loan Program alone is close to $500,000 ($485,333.56 for fiscal year 2011, specifically).

Is anybody uncomfortable that a part of state government is acting like a bank? Why can’t the recipients of these loans get private financing? If they are great deals, why are private banks and/or financial institutions not jumping at the chance to invest in these projects? Farms already face lower property tax burdens compared to commercial businesses (farm property has an assessment ration of 12 percent compared to commercial at 32 percent and residential at 19 percent, and the soil quality grading system sets a very low appraised value already) so why do they need ADDITIONAL help with subsidized loans?

Also, how can a government and a private enterprise compete when it comes to financing? By issuing below market interest rates to different businesses, isn’t the state undercutting private financial institutions? Even if a state department/agency/program loses money, it can acquire new financing by compulsion with increased taxes. A private organization does not have that same power to tax (although with TDDs and CIDs, we are getting there). Thus, with the ability to achieve easier financing, what real incentive is there for the state to make wise spending decisions when it comes to these loans besides avoiding grief from dedicated bloggers such as me? Isn’t it time for the state to get out of the business of lending with YOUR money and return to the basics? Just some food for thought.

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