RSVP Here

Cost: Complimentary, but RSVP required.

Event Sponsored by: James G. Forsyth III, John Lamping, and Rex Sinquefield

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“Now SB493 needs to become law this session so our district can retain the talented staff that is so hard to recruit to an urban district.” Those were the words of Normandy Superintendent Tyrone McNicols in a commentary on St. Louis Public Radio this weekend.

As readers of the Show-Me Daily blog know, Senate Bill 493 would fix many of the problems with the transfer law and would create a local private option for students. This local private option would allow students in unaccredited schools to attend a nearby nonsectarian private school.

It is this local private option that has the alphabet soup of education groups (MASA, MSBA, MNEA, etc.) railing against SB 493. As I have said before, the education establishment has taken an all-or-nothing approach on this issue. They are not interested in compromise. They are solely interested in stopping school choice.

Missouri Sen. John Lamping (R-Dist. 24) put it this way during a recent Show-Me Institute panel discussion about the topic [emphasis mine]:

The establishment is quite comfortable with nothing happening. They can’t say it publicly, but they’re very comfortable with nothing happening. Normandy will be bankrupt by July, they will lapse the district, they’ll merge with the surrounding districts. Riverview Gardens will go bankrupt next year; they’ll do the same thing. And, two or three years from now, a neighboring district will probably go through the same process of unaccreditation and becoming bankrupt. The establishment is fine with that. They will not give any reform in exchange for fixing the system.

If this bill does not pass, it is the establishment that will have killed it and in effect, sealed the fate of the Normandy School District.

Superintendent Ty McNichols doesn’t want to see that happen. He recognizes that “no bill is ever perfect, and there are issues in the bill that are controversial,” but he also recognizes when it is time for compromise. This is just such a time.

The post Normandy Superintendent Calls For Passage Of Senate Bill 493 appeared first on Show-Me Institute.

The lawmakers were candid and provided a great discussion about school choice and a potential fix to the problems with the inter-district transfer law. The Post-Dispatch’s editorial board pulled one comment during the lawmaker’s panel discussion and its press coverage gave a scathing criticism. Unfortunately, members of the editorial board were not there in person and did not get to hear all of the comments.

Well, they can watch them now. The panel discussion as well as the other presentations are now available.

Maybe they can pull some other quotes. Here are some of my favorites:

Sen. Lamping:

Missouri has a very strong filibuster. We have 34 senators and two or three or four senators can stop just about anything. But, I’m not here to tell you that two or three senators are opposed to choice. I’m here to tell you that institutional education in Missouri is the single strongest lobby that is in the capitol, bar none.

Speaker Jones:

This [school choice] will not be the end of public education as we know it. How do we know that? Because many, many, many states have incorporated many of these things we’ve talked about and they have vibrant public education school systems and private education systems, charters. Some even have vouchers and they still have public schools. So, I think it is time to try something new and give people a choice.

Sen. Chappelle-Nadal:

There is not going to be a bill without the private option. I know that. Ray Charles would know that.

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The Show-Me Institute and the Hammond Institute for Free Enterprise at Lindenwood University hosted a discussion about tax credit scholarships, explaining what they are and how they might be beneficial to Missouri. During the event, Jason Bedrick and Jonathan Butcher presented information from their recent Show-Me Institute case-studies and Paul DiPerna presented the findings of a new poll. The discussion also included a legislative panel that included Missouri Senators John Lamping and Maria Chappelle-Nadal and Missouri House Speaker Tim Jones. You can view the papers and video of the presentations via the links below.

• Bedrick case study:
• Bedrick presentation:
• Butcher case study:
• Butcher presentation:
• DiPerna presentation:

The post Expanded Opportunities: A Discussion About Tax Credit Scholarships appeared first on Show-Me Institute.

When I speak about tax credit scholarships, I get a lot of questions: What is a tax credit scholarship? How would that work? What are the chances of that passing in Missouri?

If you want to find out the answer to these and other questions, join us on April 25 at Lindenwood University in St. Charles, Mo. We are partnering with the Hammond Institute for Free Enterprise at Lindenwood University to present a dynamite event, “Expanded Opportunities: A Discussion About Tax Credit Scholarships.”

Jason Bedrick, of the Cato Institute, and Jonathan Butcher, of the Goldwater Institute, will present information about how these programs are working in other states. You can download their recent case studies for the Show-Me Institute about the New Hampshire and Arizona programs directly from our website.

Attendees also will be able to take part in a panel discussion with Missouri Sen. John Lamping (R-Dist. 24), Sen. Maria Chappelle-Nadal (D-Dist. 14), Missouri Speaker of the House Tim Jones (R-Dist. 110), and Rep. Michael Butler (D-Dist. 79).

RSVP online, mark your calendars, tell your friends, and join us on April 25.

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State Sen. John Lamping, R-Ladue, has followed through with his plan to file a bill that eliminates state income taxes on the first $2,000 in individual income and replaces the money by hiking the state’s cigarette tax — now among the nation’s lowest.

Lamping says the bill is revenue neutral.

Under his proposal, SB 638, no Missourian would pay taxes on the first $2,000 of earned income. Now, state income tax is levied on all income, no matter how small. That cut would cost the state $128 million a year.

As David Stokes noted Thursday, non-smokers and infrequent smokers would be net beneficiaries if the legislation is implemented. The problem is, who would not be a net beneficiary? Smokers tend to be poorer than non-smokers, and any hike in the cigarette tax will tend to hit those living in poverty fairly hard. In 2009, the CDC found that “[t]he prevalence of current smoking was higher among adults living below the federal poverty level (31.1%) than among those at or above this level (19.4%).” Will there be a deterrent effect if there is a marginal increase of 26 cents in the cigarette tax? Possibly, but it also is fairly likely that what the poor gain from the income tax reduction could get eviscerated by the cigarette tax hike. If income taxes were exempted at a higher level, a “worse off” scenario for poor smokers would be less likely.

But there is an alternative to a straight cigarette tax hike if legislators really want to exempt income from the individual income tax. I wrote last week that major reductions to the corporate income tax could be made with the elimination of millions of dollars in failing tax credits. There also is ample room for a deeper cut to the individual income tax that would increase the likelihood that the poor would be net beneficiaries in a tax system rebalancing. Aside from the drastic hikes in the cigarette tax that have been proposed elsewhere, which would exacerbate the problem for the poor, a reduction in tax credits could account for much of the revenue required to make major cuts to the individual income tax.

Put more succinctly, to reduce income taxes, other taxes do not necessarily have to go up if state tax credits go down to a more manageable and appropriate level. Instead of picking winners and losers, let everyone benefit. It would make for a better Missouri and a better-balanced tax system.

The post Legislators Can Rebalance Tax System — And Make Missouri More Competitive — Without Raising Taxes appeared first on Show-Me Institute.

I think this is definitely an idea worth discussing. Everyone in the state would benefit from the tax cut (approximately $35 per worker, and part-time employees would benefit just as much as full-time — unless they are really part-time), and smokers would only pay more after they buy their 135th pack of smokes for the year. Basically, a pack-a-day smoker would pay an extra $60 per year in taxes under this plan, while more casual smokers would basically break even or come out ahead. (Is there anyone left alive who still smokes more than one pack a day? I mean, other than this kid, who doesn’t pay American tobacco taxes.)

The small size of the cigarette tax increase in this bill makes it immune from our criticisms that residents of other states would stop buying their cigarettes here, and thus cost Missouri that voluntary money. Of course, some marginal level of out-of-state purchases will be lost, but for the most part, Missouri’s tobacco tax would still be much lower than surrounding states. I think most of our commuters, visitors, etc., who enjoy a draw would still make a point to buy their smokes here.

I like the part of this proposal that all Missourians would benefit equally from the income tax cut. I like that casual smokers would roughly break even, and heavy smokers would only see a small tax increase. I like that out-of-state smokers would likely still continue to buy here when possible.

I do not necessarily like that a percent of the population (the smokers) are being targeted to fund a general benefit. However, we crossed that bridge a long time ago, and this proposal is far less drastic, and more equitable, than many similar proposals. I do not deny the political reality that tobacco taxes are going to be increased at some point. If that reality takes the form of a small cigarette tax hike that funds a tax cut for all Missouri workers (including the smokers), then Missouri could do a lot worse.

It is not just that the state could do worse, it is that we probably would do worse, such as some drastic cigarette tax hike that drives out-of-state buyers back home and uses the new tax money to fund a new tax credit only for films about ethanol-powered historic buildings near transit.

I think Sen. Lamping’s proposal has a lot of merit and deserves serious discussion.

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Transcript

Audrey Spalding: [testimony]

John Lamping: The name of your organization again?

Audrey Spalding: The Show-Me Institute

Bob Dixon: I was just curious in listening to your testimony there about the cost … if you did any sort of analysis with respect to the opportunity cost of — let's say we don't do it, and it goes somewhere else.

Audrey Spalding: I have not done that study. We haven't had time to do that study given that the ”Aerotropolis” tax credits, the amounts in particular, were recently agree upon. I think, I would assume: 1) that the tax credits are necessary to the creation of an international hub; and, 2) that such an international hub would be successful. Regardless, I think anyone can agree upon the fact that there is at least a possibility that this is not successful.

Eric Schmitt: I have a follow-up. Mr. Dixon?

Bob Dixon: I would be interested to, if you're going to present a study like that, I'd be interested to see some sort of analysis on that. Because a lot of times we do things, recently we sent to the governor's desk a phase-out of the corporate franchise tax, but I don't think that your organization was here to testify against that because of the cost. I realize it's a different issue, but it seems to be an opportunity that, if it's lost, we could certainly lose out, and I'd like to see us calculate that cost. Thanks, Mr. Chairman.

Eric Schmitt: Thank you. And I want to, first of all I want to thank you for coming up here and testifying. I totally disagree with your analysis. You made reference to the $480 million. Are you aware of how long it would take for the $480 million, if everything hit, how long that would take?

Audrey Spalding: Yes, I realize that would not hit immediately.

Eric Schmitt: Do you know how long of a period of time it is?

Audrey Spalding: I believe that it's more than a decade.

Eric Schmitt: Fifteen years. So, if everything hits, if we hit the freight-forward piece, if we're building facilities, if we have industry that we don't have in our state right now, and the only way that they get any of the credit is: they invest in a $20–25 million building, they're operating, they've created jobs, we have the kind of economic activity that we were seeking with the legislation that we don't have, I do not understand how an organization that seems to at least state that they're for economic growth cannot get behind an idea of incentivizing people to come and do things that we just don't have. So, my question is, if this is a real possibility, is it worth doing? If China, which is first-in, is gonna move, and wanna have the ground, which they don't have in Chicago, is that worth having in our state?

Audrey Spalding: Well, I think perhaps we approach this from a different, each from different standpoints, obviously. Now, we're talking here about this proposed international hub, and of course there have been talks of a China hub in other countries, so this would be a wonderful idea. Given that those talks are occurring, isn't it also at least possible that Saint Louis–area developers and other such entrepreneurs would be entrepreneurial enough to seize upon such an opportunity without state help?

Eric Schmitt: But if you don't have, my question to you is, if it doesn't happen, and I know you're seeking some sort of letter of, memorandum of understanding or something. If it doesn't happen, none of this revenue that we would be foregoing — because that's what it is, we're foregoing revenue — which I find it interesting, actually, as a Republican, I hear a lot … really, what we're doing here is we are reducing the tax liability to create and to have an industry in our state that we don't have. I don't find that offensive in any way. People campaign a lot about this, about job growth, about opportunities, about having and creating an economic environment in our state that's conducive to the creation of quality jobs — well, here it is. And being critical of a new idea that's bold isn't anything new or isn't anything unique. I'm sure the steamboat captains of the late 1800s thought that the railroads were something that threatened their interest, or that people would be inconvenienced as their homes or property might be bought out to make way for the new mode of transportation. But guess what? One city got it right. Chicago got it right and Saint Louis was standing on the sidelines. I don't want to be remembered … there's a mural in the Senate, I spoke of this last time, of the first senator, Sen. Benton, who was talking about having that westward expansion of the railroad from Saint Louis to the west coast, and we missed it, OK? What I'm saying this session is: This is important enough that I think we need to stand up for growing the pie. And I know there's going to be plenty of people that poke holes and have criticism, but that's what critics do, OK? It's our job, up here, to seize on an opportunity to grow our economy, and there couldn't be anything more real or more immediate than being in the center of an international trade hub. Any great civilization, any great city has been at the confluence of routes, of commerce, of industry. That's what we have an opportunity for, here. And just because we want to live in an ivory tower and we want to give great speeches about what things might look like if we lived in some utopian world — we don't live in that world. We don't live in that world. So we can choose to compete, or we can be economic isolationists and we can build a great wall around our state. I think it's our job in this committee and in this Senate in this session to break down those walls, to open up trade routes, to create opportunity for Missouri businesses, the ag community. We heard from the pork producers today. This is an opportunity that we haven't seen in this state. So I appreciate, I really do appreciate you coming up here. I appreciate your different point of view. I've seen some of your articles. I haven't had a chance to visit with you; we haven't had a chance to talk about the legislation. I'd be happy to do that with you more. I know that you were probably coming in to a room where there's a lot of support, so I do appreciate that, but I respectfully disagree. Thank you. Any other questions?

Victor Callahan: Railroads were federal stimulus.

Eric Schmitt: Any other witnesses in opposition?

Christine Harbin: [testimony]

Eric Schmitt: Before I go, I just want to make note that it sounds like you're advocating more money for social spending, and, if I recall correctly, the Show-Me Institute was against the autism bill last year.

Christine Harbin: I'm sorry?

Eric Schmitt: The autism bill. I believe the Show-Me Institute had an editorial piece against the autism legislation last year, so I'm glad to see that the Show-Me Institute is advocating more money being spent on social programs now.

Christine Harbin: That wasn't my implication and I didn't work on that particular thing.

Eric Schmitt: Any questions? Sen. Dixon.

Bob Dixon: Earlier in your testimony, you referenced my question of the previous witness, and then in your reference to the St. Louis Business Journal, I believe in their editorial, before I ask you a question I'll just mention: I probably take greater offense at being called "out-state." I'm from Springfield, and I don't have … you know, I'm not in the Saint Louis area, and I support this legislation wholeheartedly because I think it's good for the entire state. But that, I'm more concerned about that mentality that we're not in-state, we're out-state, than I am anything else, because we don't need those kind of divides in Missouri, and that's part of what has hampered progress in the past. But my question specifically is, going back to what I asked of the previous witness, if you would please clarify what you said pointed to that question, because I still don't see anything where we're talking about the lost opportunity, and where that cost has been calculated. And then, specifically what services — and you used the word "services" — would be. That also is a concern, but I won't go into a big statement about that, because I don't believe the state provides "services," or if that fits. But if you could enumerate on what services you think we need to be funding with those "opportunity dollars," if you will, and then, also, how that testimony would have addressed my previous concern.

Christine Harbin: Sure. When I say "services," I just mean other government programs. I'm speaking in very general terms. I'm talking about education …

Bob Dixon: Bureaucracy.

Christine Harbin: Yeah, building roads, fixing potholes, stuff like that.

Bob Dixon: Those basic things I can agree with are functions, but if we're talking about "services," there's a lot of people roaming these halls talking about benefits for this that and the other, which, in my opinion, are not a function of state government. To that point, that answers that question. Specifically to the lost opportunity cost, if you could address that.

Christine Harbin: Certainly. Well, I would say that it's impossible to calculate with certainty what could have been in the absence of this policy. However, what I described in my testimony is … When you have a large public works program like this, when you have a large tax credit program like this, people are forced to, taxpayers contribute more of their earnings, a greater percentage of their earnings towards the program. And so, as a result, it means that they have less money to spend in the private sector.

Bob Dixon: Potentially.

Christine Harbin: Potentially. Because otherwise, they could see a reduction in services, too. It's some combination.

Bob Dixon: Some of that, though, I would have to say, and I'll yield back to the chair, but some of that also comes from the concept that any money not collected by government is actually just tax money that we didn't collect, which I fundamentally disagree with that whole mindset. A tax credit is not, and the courts even have ruled on that in various cases, one in particular, but those are not state dollars.

Christine Harbin: Agreed. I agree that it's not state dollars. I'm just saying that, as a consequence of programs like this, Missourians, taxpayers, have less money to spend themselves.

Bob Dixon: Potentially.

Christine Harbin: Potentially. It's difficult to calculate with certainty how much is taken out, but they're going to eat at fewer restaurants, they're going to spend fewer nights in hotels …

Bob Dixon: The very strong likelihood also exists that, in the long term, because of the economic growth, we could see substantially — and perhaps exponentially — more.

Christine Harbin: Agreed.

Bob Dixon: OK. I just wanted to make sure that, and again, I would like to emphasize that I would love to see some sort of a more exhaustive study on that end. Thank you. Thank you, Mr. Chairman.

Eric Schmitt: Sen. Richard.

Ron Richard: Mr. Chairman, just briefly, as someone who's done in Joplin, the lady mentioned my city, who's done most of the economic development for the Saint Louis region, us poor people that are barefoot and corncob pipes have done more to back up Saint Louis and the community in Kansas City than frankly some of the Saint Louis–elected people. And the reason we have is because we understand what's at the other end of the highway, which is Saint Louis. And as they progress and do well, the rest of us will, too. Everything that the Show-Me Institute is for, I'm against, and everything they're against, I'm for — and we're both conservatives, I don't understand that. I mean, we fought for organization on the Bombardier in Kansas City, and it was a stretch, didn't work. This may be a stretch, but I've been to Saint Louis somewhere almost twice a month, as in Kansas City, and I've got business people and friends of mine that live in Saint Louis that are begging for something new and creative. So we take a chance. And I think the chairman has a great opportunity here to take a chance on something. If it doesn't happen, nothing is given away — no tax credit. Granted, the lady's right, tax credits may be a little overwrought, and I think there's a mechanism to address that, and the chairman has a plan for that. But I will say that, until Missouri is ready to take a chance on something new, we'll just be a lackluster state. We will have all our kids move away, our universities will disintegrate, our highways will disintegrate, our schools don't have to worry about opening ‘cause there'll be no one going to school, ‘cause there won't be tax money one of these days. So, I respect the lady's opinion, again I think we take a chance, I think we move forward, and I support the chairman and I will support Saint Louis every time I get a chance.

Eric Schmitt: Thank you. Any other questions? Sen. Lamping.

John Lamping: I'm curious about a couple things, actually. First of all, you were kind enough to quote the St. Louis Business Journal, and I'm curious to know what the Show-Me Institute's opinion would be on their proposed outcome, which is, we simply offer $60 million tax credit to freight forwarders. So what's your opinion of that idea?

Christine Harbin: I didn't study that particular proposal.

John Lamping: Well, that was the second half of the editorial you just quoted.

Christine Harbin: Yeah, sorry. Similar to how you said earlier in response to the question and answer session with Audrey: You're either for it or you're against it. I testified in front of the Tax Credit Review Commission last September. And I have been a very vocal supporter of the total elimination of targeted tax credits in Missouri. And that holds true here, too. I think that Missourians would be better off if they were able to keep their earnings and spend it themselves in the private sector. So, I do not support kind of a halfway …

John Lamping: So you like the idea of suggesting that some of the Business Journal editorial is correct in pointing out the fact, in your opinion, that the rest of the state subsidizes it, but you disagree with the conclusion they come to — you don't support.

Christine Harbin: I agree with their criticisms of the project. I don't fully support their policy recommendation.

John Lamping: Second thing, probably unlike most of the members of this board, I appreciate you coming forward today. As someone for who economics is kind of a hobby, I study … I'm a member of the Show-Me Institute, as well as many other think tanks, as I like to stay abreast and current of different thoughts and ideas. But one of my favorite economic terms that all my teachers used over and over again, and us in business and finance always laughed when we think about this, is this concept of all things being equal. And that's something that, your study of economics sounds like from school. And that's where the theoretical world comes in and they say, "Well, all things being equal, then, well, here's our supply line, here's our demand line, we're going to now go forward with our great discourse and our great study, assuming all things are equal." I think what the chairman spoke to today is the reality that the world, all things are not equal. There's the theoretical and there's the reality. And as much as I enjoy sitting down and going through the theoretical. I think that it helps for, and again, maybe that's your role. Maybe that's your role in the discourse: It's to be the theoretical go-to. Unfortunately, in this capitol building, it's all about the reality and the real, and all things are not equal. And when it comes to economic development in and around this region, clearly all things are not theoretically perfect. So, I appreciate you coming forward, it's a really interesting part of the testimony, and I look forward to your next publications.

Christine Harbin: Can I respond to that?

Eric Schmitt: Sure.

Christine Harbin: To that last point, I agree that economics is separate from natural sciences because it can't really be studied in a laboratory, we're kinda going through it, you know, as we are. However, I think that my focus here is very reality-based. I think that the idea of this particular policy awarding close to half a billion dollars in tax incentives to a small group that is … The hope is that it will encourage trade, but I think the reality is that it won't.

Eric Schmitt: OK, let me follow up on that. If it doesn't, do we expend any tax credits?

Christine Harbin: If it doesn't encourage trade?

Eric Schmitt: Correct.

Christine Harbin: You mean after we go through the policy? After we enact it?

Eric Schmitt: Look, I do want to — and I do appreciate you coming out — I just want to make, I want to understand, know that you understand the bill …

Christine Harbin: Oh, I read it.

Eric Schmitt: So what is your understanding of how the tax credits are awarded for facilities?

Christine Harbin: It was what Audrey outlined. We offer tax credits to support the subsidization of these warehouses.

Eric Schmitt: But how does that work? How does that work?

Christine Harbin: I don't have the text of the legislation in front of me.

Eric Schmitt: Well, you're testifying against the bill. OK? And I'll just explain how it works, which is, you build a building. It's a $25 million building, you operate it, you get a portion, it's screened over five years, each year you have to prove that you're getting the economic activity and the jobs. So, if those buildings never get built, my point is, if the buildings never get built, and we don't have the trade, there's never any tax credit. So, it's a very different reality from what you're explaining, which is, we're spending 500 million and hoping that people come. The reality is, if they come, at that point we have the infrastructure because of the trade. So it's just a, it's different, it's a different sequence of logic here.

John Lamping: Mr. Chairman, my guess is, what she really means to say is that she's against the Business Journal's recommendation to just do the freight-forward piece. ‘Cause that would then show no evidence of successful …

Ron Richard: [Sen. Richard's microphone was turned off, so this portion is inaudible]

John Lamping: Maybe we'll find out in Friday's edition.

Christine Harbin: Well, my response is: If it's such a great idea, then there's a lot of entrepreneurs in Saint Louis with great ideas, with multiple skills — let them take risks and bear the burden.

Eric Schmitt: So, it'll just happen?

Christine Harbin: Yeah, incremental change.

Eric Schmitt: Sen. Dixon.

Bob Dixon: Yeah, I just want to follow up on the comments from earlier, I wanna make it very clear. I failed to thank you for coming. I want to make it very clear that I really do appreciate you coming, as several others have said, and I appreciate the Show-Me Institute for the stands they've taken on several things, principled stands. We'll just have to agree to disagree on this one, but it takes a lot of courage to come and testify in a room full of people that are in favor of something, testify against it. And I do appreciate it.

Christine Harbin: Thank you.

Eric Schmitt: Any other questions? Thank you again. And I really, I do appreciate it. Obviously I have … I believe in it. You're passionate; I'm passionate; that's what this process is all about. So, I do appreciate you taking the time to come up to Jeff City; it's not easy to come in and express at one of these.

Christine Harbin: Thank you.

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