Page 690 – Show-Me Institute

East Side Stripper Full Employment Act Advances

Posted on February 22, 2010May 5, 2026 by John Payne

I’m quite a bit late on this one, but a couple of weeks ago, the Missouri Senate overwhelmingly approved a bill that would essentially shut down all strip clubs in Missouri. The bill would ban strippers from, well, stripping, because it would would require them to be at least partially clothed, and even when partially clothed, they must stay at least six feet away from customers. Oh, and they wouldn’t be able to serve liquor, either. I doubt many strip club patrons are going to want to go to a club where they can’t drink, and where the girls all have to walk around with tape measures to ensure they don’t get too close, so I suspect many of these businesses would likely close.

The most obvious consequence of these closings would be that people formerly employed in that segment of the adult business in Missouri would either seek new lines of work or move to other states that are more accommodating of their current professions. The supply of this good may diminish or even disappear, but the demand for it won’t go anywhere. This situation could easily lead to results that should give pause to the social conservatives who support this bill.

The increased hassle of the legislation might dissuade some people from consuming such lascivious services, but others will seek out substitutes. It would likely lead to an increase in the consumption of pornography and prostitution (and some unemployed strippers would probably enter the world of prostitution, as well). But that still may not be the worst of it.

A 2006 study by Clemson University economist Todd Kendall argued that greater access to Internet pornography helped drive down the incidence of rape during the prior two decades. In a Slate article, fellow economist Steven Landsburg summarized Kendall’s findings:

First, porn. What happens when more people view more of it? The rise of the Internet offers a gigantic natural experiment. Better yet, because Internet usage caught on at different times in different states, it offers 50 natural experiments.

The bottom line on these experiments is, “More Net access, less rape.” A 10 percent increase in Net access yields about a 7.3 percent decrease in reported rapes. States that adopted the Internet quickly saw the biggest declines. And, according to Clemson professor Todd Kendall, the effects remain even after you control for all of the obvious confounding variables, such as alcohol consumption, police presence, poverty and unemployment rates, population density, and so forth.

OK, so we can at least tentatively conclude that Net access reduces rape. But that’s a far cry from proving that porn access reduces rape. Maybe rape is down because the rapists are all indoors reading Slate or vandalizing Wikipedia. But professor Kendall points out that there is no similar effect of Internet access on homicide. It’s hard to see how Wikipedia can deter rape without deterring other violent crimes at the same time. On the other hand, it’s easy to imagine how porn might serve as a substitute for rape.

If not Wikipedia, then what? Maybe rape is down because former rapists have found their true loves on Match.com. But professor Kendall points out that the effects are strongest among 15-year-old to 19-year-old perpetrators—the group least likely to use such dating services.

Moreover, professor Kendall argues that those teenagers are precisely the group that (presumably) relies most heavily on the Internet for access to porn. When you’re living with your parents, it’s a lot easier to close your browser in a hurry than to hide a stash of magazines. So, the auxiliary evidence is all consistent with the hypothesis that Net access reduces rape because Net access makes it easy to find porn.

There are legitimate reasons to question such a strong conclusion on Kendall’s part, some of which were pointed out by Steven Levitt of Freakonomics fame, but it cannot be easily dismissed. Furthermore, it would be inappropriate to draw direct parallels between Kendall’s study and the strip club situation in Missouri, because they are not perfectly analogous. Most obviously, 15-year-old to 19-year-old boys are not likely to be found in strip clubs to begin with. Still, the general idea holds up. People seeking sexual gratification may turn to much worse alternatives in the absence of easy access to common consensual options like pornography and strip clubs.

Let me be very clear: I am not predicting that this law would result in a measureable uptick in rapes in Missouri. In fact, absent a good control group, it would be hard to establish statistical correlation, let alone causation. What we do have is some very suggestive evidence that the law of unintended consequences may apply to this law in a fierce way, and it is something that the law’s supporters should think carefully about.

Rent-Seeking Behavior in the Illinois Wine Industry

Posted on February 22, 2010May 5, 2026 by Christine Harbin

According to a story from WSIL:

A plan pushed by Rep. Mike Bost, R-Murphysboro, could bolster a core of his district’s economy. Bost wants to create a fund that would go toward improving the region’s wine industry.

He’s proposing to divert a portion of the revenue from the excise tax on wine, and reinvest it in the industry. It’s classic rent-seeking behavior. He also uses the copycat argument (i.e, “other states are doing it, so mine should, too”) that many legislators use to justify production incentive programs for their favored industries.

“This is not anything that hasn’t been done in other states,” Bost said. “That is why the state of Missouri has grown its wine industry so well, and it’s because they are able to do this.”

Although it is true that Missouri provides assistance to wine producers, it does this in a manner that’s different than the one proposed in Illinois. Rather than diverting excise tax revenue, Missouri provides a generous tax credit to wine producers.

Using the “Show Me: Tax Credits” web tool, I discovered that Missouri has awarded $5,736,848.39 under the Wine and Grape Tax Credit during the past decade. The largest recipient, Stone Hill Wine Company, received a combined sum of $2,005,629.22 from 2002 through 2004:

Trend Wine and Grape Tax Credits Awarded in Missouri by Vendor

First and foremost, I disagree that a state should rely on tax credits to attract businesses. A state is better off if it has businesses that are self-sustaining, not reliant on government assistance.

That said, however, I prefer Illinois’ proposal to Missouri’s Wine and Grape tax credit program because it places the burden of the subsidy on users rather than on non-users. In Missouri’s program, all taxpayers in the state pay for the subsidy. In the Illinois proposal, only those who consume the product are assessed. It’s a user-fee system that’s analogous to the way in which gasoline taxes and tolls fund highway maintenance.

Additionally, it’s fallacious to expect that the production and consumption should be equal within the state. States like Missouri and Illinois should focus on the activities that they do best, and then realize the benefits of free interstate trade. If Illinois were serious about maximizing its wine consumption, it would specialize in some other type of production that it can do more efficiently, and then trade with another state that has a comparative advantage in producing wine.

Critics of the Illinois proposal are correct to state that the money being spent on wine production cannot be spent on other programs, such as education. However, the same can be said of the money that Missouri taxpayers spend via the wine and tax credit. No matter how it is routed, taxpayers are going to be poorer by the amount of the subsidy.

Great Article About the Land Tax in the Kansas City Star

Posted on February 22, 2010May 5, 2026 by David Stokes

This weekend, KC Star columnist E. Thomas McClanahan had a terrific article about the benefits of replacing earnings taxes with a land tax, as proposed for St. Louis and Kansas City by Show-Me Institute executive vice president and University of Missouri–Columbia economics professor Dr. Joseph Haslag. This is the second major KC-area piece that really demonstrates an understanding of how a land tax creates a better incentive structure relative to other types of taxation. The Pitch had an excellent story on the issue in 2008.

As if the article was not great enough, I also want to share the remarks of commentor number 3, “jayhawk6”, who said:

Good explanation for just how the land tax works. The spiteful aspect of property taxes […] is that a homeowner can be discouraged from improving his/her home because it will raise its value and thus the tax burden.

We thank both McClanahan and “jayhawk6” for the attention and focus on this important issue. McClanahan is absolutely right when he says that a land tax should be adopted as an eventual replacement for the current property tax system even if the earnings tax is maintained. (But it should NOT be maintained.) Although, as the article explains, this would entail amending the state constitution, counties in Missouri could move in that direction simply by applying more of the current value of property to the land, and less to the improvement. Then, as the property might be improved, the taxes would rise less because the portion determined by land value would hold steady.

The Urban Chicken Debate Continues

Posted on February 22, 2010May 5, 2026 by Sarah Brodsky

The St. Louis Post Dispatch covers both sides of the urban chicken controversy in this article. In the paragraphs that deal with complaints about unwanted chickens, you could replace the word “chicken” with the name of any other pet. When you allow people to keep animals, some owners will be irresponsible and some will abandon their pets. This is no more reason to outlaw urban chickens than the glut of chihuahuas in California animal shelters is reason to forbid chihuahua ownership.

Unwanted chickens will be kept to a minimum if the birds go to people who seek them out of their own volition. Foisting chickens on reluctant citizens will result in abandoned animals. With that in mind, I’m not in favor of the Maplewood-Richmond Heights School District’s plan to encourage chicken ownership. The district has a goal of convincing 50 families to keep chickens. I’m afraid that if it offers too much encouragement, people who aren’t so excited about chickens are going to give in and adopt them, only to abandon them later. A better goal would be to provide information about chickens to anyone who’s interested, without setting a lower bound for the number of chicken owners.

The district’s on-site chicken coop is a good idea; children can learn a lot about animal life cycles from watching chickens. When I was in elementary school, individual classrooms raised chicks. Building one coop for the whole school might allow for more efficient maintenance, and classes could come one at a time to observe the birds. It also could be more practical to keep chickens on a permanent basis than to order new chicks each year and give them away when school’s out.

May I Have A Taxpayer-Subsidized Land Rover, Too?

Posted on February 19, 2010May 5, 2026 by Christine Harbin

[NOTE: Since the original publication of this blog entry, additional information has been released about the filmmakers accused of purchasing personal vehicles using Iowa’s film tax credit program. From the Iowa Republican:

Yesterday we learned the names of the two movie producers who used the Iowa Department of Economic Development’s film tax credits to purchase luxury automobiles. Bruce Isacson, who filmed the movie “South Dakota,” apparently owns a 2008 Range Rover that cost $61,000. Donald Borchers, who remade “Children of the Corn,” owns a $68,000 Mercedes.

We would like to emphasize that these are separate filmmakers from those involved in production of the film The Scientist, also referenced in the blog entry below.]

Three companies and three individuals that were involved in the production for the film The Scientist have been charged with inflating and falsifying expenses in order to obtain more than $1.85 million in tax credits through Iowa’s film tax credit program.

According an article in the Des Moines Register:

Weiner Runge, a 44-year-old film-maker and resident of St. Louis Park, Minn., is accused of a felony for reportedly inflating values of expenses on applications to the state for tax credits. Over the course of the project, Weiner Runge inflated the cost of making the film from $767,250 to almost $1.8 million, according to the Attorney General’s office. […]

Saunders, 37, […] provided free services that were used to claim $2.5 million in credits. Saunders also faces felony theft charges.

The following are specific examples of how they are accused of inflating the cost of the services and products that they consumed under the guise of the film tax credits.

Court records indicated Maximus Production Services filed claims for rental equipment that were significantly inflated, such as $225 each for a push broom, a hand broom, a metal rake, a pick axe and a sledge hammer, and two shovels for $450.

The invoices also included various sizes of step ladders that ranged from $900 each up to $1,125, and a 24-foot extension ladder reported to have been rented for $1,350.

As for the most egregious misuse of Iowa’s film tax credits, filmmakers involved in two other productions bought a Mercedes and a Land Rover for themselves. From the Des Moines Register again:

[S]tate officials found [movie]-makers had used the tax credit program to purchase two luxury vehicles worth more than $60,000 and other items later put to personal use.

If these filmmakers purchased their vehicles in Minneapolis, the combined state and county sales tax rate would have been 7.375 percent if not for the tax credit exemption. That means that the filmmakers avoided paying more than $8,850 in sales taxes on their combined vehicle purchases. This is the amount of money that the film producers saved buying the vehicles in Iowa under the guise of a film production, and it represents lost sales tax revenue for Minnesota. Filmmakers who live in Hollywood, Calif., would have an even greater incentive to buy luxury cars using film tax credits in other states because the combined state and county sales tax rate there is 9.75 percent. For a purchase of $120,000, then, a person would have to pay an additional $11,700 in sales tax.

Supporters of film tax credit programs say that the films have economic and fiscal impacts beyond the amount that the filmmakers spend in the state. We’ve discussed this concept in a previous post on this blog, in fact. I’d like to pose the following questions to these supporters: How much economic activity does the purchase of a luxury car generate in the state economy? How much extra output does it yield for the state? Will this motivate more people to move to the state? My answers are, in order, “not much,” “none,” and “no,” but I am eager to read their comments.

I worry that Missouri’s film tax credit program could be at risk of the same kind of fraudulent activity, because it has a structure similar to Iowa’s program. Under both programs, the tax credits are transferable. Iowa has since pulled the plug on its program to scrutinize its accounting, and Missouri would be better off doing the same.

More Support for Sentencing Reform

Posted on February 19, 2010May 5, 2026 by John Payne

Writing in the Missouri Record, Mizzou political science professor David Webber highlights some of the hard numbers behind Missouri Chief Justice William Ray Price’s call to lessen the criminal sanctions on nonviolent offenders:

Missouri has twice the number of nonviolent offenders in prison [as] it did in 1994. The number of new inmates in 1994 was 4,857; in 2009 it was 7,220. The cost per inmate is now $16,456 per year or about $45.00 per day. The total appropriation to the Department of Corrections in 1994 was $216 million now it is over $670 million—an increase of over 300 percent[.] Worse yet, Missouri’s recidivism rate is 41.4 percent within two years.

Price is also concerned with inconsistencies in sentencing across the state’s judicial circuits. The average sentence for the lowest sentencing circuit is 4.5 years and for the highest circuit is 9 years.

The Chief Justice shares the same opinion that most citizens have about crime—violent, dangerous criminals need to be incarcerated—but he doubts the effectiveness of locking up first-time offending drug and alcohol addicts. Price states boldly: “We also know that simple incarceration, no matter how expensive, does not cure addiction. Treatment with strict judicial oversight does.”

If newspaper editorials are any kind of indication, the idea that we need a cheaper and more humane way of dealing with drug offenders and the like is extremely popular. Hopefully, political inertia will not doom such a worthy cause.

Another Excellent Bill in the Wisconsin Legislature

Posted on February 19, 2010May 5, 2026 by Sarah Brodsky

Wisconsin is debating another proposal involving milk. The Wisconsin raw milk bill I wrote about yesterday would put Wisconsin’s policy ahead of Missouri’s, but on this issue, Missouri already guarantees its citizens greater freedom. The matter I’m referring to is breastfeeding in public.

Breastfeeding in public places is protected by Missouri law. In fact, you can print out your own “license” featuring a quote from the statute, and show it to anyone who challenges your right to breastfeed.

Payday Loan Industry Bad; Mob Racketeering Good

Posted on February 19, 2010May 5, 2026 by David Stokes

Yesterday in St. Louis, opponents of the payday loan industry held a hearing, which was covered by the Post-Dispatch and linked to by Combest.

Here is my advice to every person in Missouri: Stay away from the payday loan industry; the vast majority of the time, it is a terrible financial decision to make use of it. Here is my advice to the government: Stay away from the payday loan industry; it is not your role to interfere in private contracts and prevent people from making poor financial decisions.

Then there are the unintended consequences that would result from eliminating, or severely restricting, the industry. It is not as though the people who now use payday loans would suddenly no longer have any need for a loan. Some would move into receiving loan services from the banking system (a good result), some would entirely lose the ability to obtain credit (a mixture of both positive and negative results), and some would turn to the loan shark industry with all of its attendant risks, violence, etc. So, if you want to improve the climate for loan sharking and enforcing collections with baseball bats, then by all means legislate the payday loan industry out of existence.

This set of arguments about payday loans has also been covered by Show-Me Institute op-eds superior to this blog post.

Trend of Film Tax Credits Awarded in Missouri

Posted on February 19, 2010May 5, 2026 by Christine Harbin

Using the “Show Me: The Spending” web tool, I mapped the historical line graph of the film tax credits allocated in Missouri during the past decade. The only spike in the graph occurred in 2009, and that was for Up in the Air:

Trend of Film Tax Credits Awarded in Missouri

The total number of tax credits that have been issued since 2000 is 35, for a total amount of $12,927,154. The average amount of a tax credit was only $369,347, which is much less than I anticipated. The smallest amount of credit that was awarded was $19,048, and the largest was $4,131,011. The latter award occurred in 2009, for Up in the Air, and it is represented by the spike in the graph for that year.

Although I disagree that Missouri should offer film production incentives, I am relieved to learn that few productions are taking advantage of it. Only one film has come close to the tax credit cap during the last 10 years. I have heard many of our commentators and politicians call for increasing this cap, but this graph leads me to believe that it would not encourage a marginally higher number of large-scale productions. It would be as efficacious as putting a price floor below the equilibrium price.

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