The federal government will roll out a new tax-credit program in 2027 to expand school choice. Taxpayers will be able to receive a dollar-for-dollar federal tax credit for donations of up to $1,700 annually to a scholarship-granting organization (SGO) in Missouri—or any other participating state. The SGO then distributes scholarships to families seeking alternatives to their residentially assigned public schools.

In a previous post I wrote about the new program, focusing on the challenge of deciding which educational expenses should qualify for scholarship funding.

Over at Education Next, Rick Hess has a thoughtful piece on other aspects of the program. As both a school choice advocate and an advocate of fiscal responsibility, he opens with a concession, acknowledging the potential loss of tax revenue the program could create at a time when the federal debt is growing rapidly.

He then makes what I think is the right point: While it is unfortunate that the federal budget is off the rails, it is hard to get too worked up about this program when (a) it is a drop in the bucket compared to our broader fiscal problems, and (b) so much of our debt-financed spending benefits older Americans. If we’re going to keep borrowing, why not direct at least a small share toward expanding opportunities for children?

I share Hess’s bottom-line sentiment. I wish the federal government managed its finances more responsibly. But since that does not appear likely anytime soon, investing a bit more in the children who will ultimately inherit—and help repay—that debt seems sensible to me.

Turning to the program itself, Hess raises an important practical concern. Even though this is a dollar-for-dollar tax credit, which means it is effectively costless for taxpayers to participate, we should not assume it will be widely used. Many taxpayers may be unaware the credit exists. Others may doubt they’ll actually receive it or may not know how to make a qualifying donation to an SGO. Even modest uncertainty or inconvenience can discourage participation.

These are legitimate concerns. The new scholarship tax credit has the potential to generate substantial resources to expand school choice, but realizing that potential is not automatic. As Hess puts it, “I don’t put a lot of stock in the casual assurance that taxpayers will jump through hoops to give money away simply because, as one very prominent champion explained to me, ‘It’s a good thing to do.’”

Hess’s piece points to one of the program’s biggest implementation challenges. Helping taxpayers understand the credit—and making participation as simple as possible—could make an enormous difference. Show-Me Institute analysts will certainly be doing our part, and I hope many others will as well.

The post How Much Will the New Federal Scholarship Tax Credit Boost School Choice Funding? appeared first on Show-Me Institute.

MOScholars isn’t a hypothetical policy experiment anymore—it is a rapidly scaling alternative for families across our state. In just four years, student participation has gone from just over 1,300 students to nearly 6,500. The state treasurer’s office reported a massive surge in applications early this spring, indicating that even more families would like to participate in the program this fall.

It is likely that the number of scholarships will expand even further in the near future. Governor Kehoe recently announced that Missouri will opt into a new federal tax credit program, allowing any U.S. taxpayer to redirect up to $1,700 of their federal liability toward school choice initiatives in any participating state, including Missouri.

When we fund students rather than systems, we create an environment where every child has a path to success. The legislature’s decision to back the growing demand for MOScholars with a $60 million commitment shows that parental empowerment is no longer a fringe priority. Now, the focus must shift to ensuring this funding flows transparently, efficiently, and directly into the hands of the parents who know their children’s needs best.

The post The $10 Million Budget Boost for MOScholars Is a Win for Missouri Families appeared first on Show-Me Institute.

During his State of the State address in January, Governor Mike Kehoe indicated Missouri is opting into the federal government’s new school choice tax credit program. The program resembles Missouri’s MOScholars program. Taxpayers can receive a dollar-for-dollar federal tax credit for donations up to $1,700 annually to a scholarship-granting organization, or SGO, in Missouri. The SGO then distributes scholarships to families in Missouri seeking alternatives to their residentially assigned public schools.

For many families, the scholarships will be used to pay private school tuition. But the potential is broader. At least two public school districts in Missouri already participate in MOScholars, allowing nonresident students to use scholarships to pay transfer tuition; a similar arrangement may be possible under the federal program. Funds could also support homeschooling expenses, tutoring, after-school programs, or enrollment in a microschool (the latter is a fast-growing but loosely defined sector and there is no clear consensus on what defines a microschool). The eligibility criteria are still unsettled.

Non-traditional providers are pushing for few guardrails and minimal regulation, while others argue for stronger oversight and quality controls.

I have mixed feelings. The real value of this program is its potential to expand Missouri’s education marketplace. Competition improves quality in virtually every sector of the economy, and education is no exception. But markets don’t work well when consumers have poor information, so I’d like quality controls and transparency so parents can make informed choices. Here’s the tension: expanding choice and imposing quality controls can work against each other. To illustrate, consider a heavily regulated system in which schools that accept the tax-credit payments must administer standardized tests, publicly report results, and disclose detailed information about their curricula and finances. This level of transparency would reassure policymakers, but the problem is that we cannot force private providers to participate.

And if we make it too difficult (and too costly) to participate, which schools are the most likely to opt out? The answer: the ones that already have plenty of customers without this new program—likely the best schools. And if the best schools opt out, it undermines the value of the education marketplace we’re trying to build in the first place. (This is a complicated problem. See here for a deeper discussion in the context of research that finds negative effects of a voucher program on student achievement in Louisiana.)

I don’t have all the answers, but I hope Missouri lawmakers think carefully about how to strike the right balance, particularly if the federal government gives states meaningful discretion in implementation, which I expect it will. I’d favor a middle-of-the-road approach that requires participating schools to provide straightforward, low-cost information, but without overly burdensome regulations or reporting requirements. I want the best education providers to open their doors to more Missouri students; I don’t want to scare them away.

The post The Dicey Details of the Federal Government’s New School Choice Tax Credit Program appeared first on Show-Me Institute.

For some reason, film tax credits remain popular in Jefferson City. They are much less popular with economists.

Missouri lawmakers are once again debating whether to extend the state’s film tax credit program. Earlier this month, I testified against legislation that would continue the subsidy. For those who don’t remember, this is a debate the state has already had.

Missouri operated a film tax credit program before ending it more than a decade ago. In 2010, the state’s Tax Credit Review Commission examined the program and concluded it served too narrow an industry to justify its cost to taxpayers. Lawmakers shut it down soon after. The idea never fully disappeared, though, and in 2023 the subsidy returned, this time with the promise of better results. The current program allows up to $16 million per year in credits for film and television productions.

So far, there is little evidence that anything has changed. Supporters point to production spending as proof that the program works. The Missouri Film Office reports that productions spent more than $40 million in the state in 2025 while receiving roughly $15.7 million in credits. But production spending is not the same as fiscal return. Much of that activity consists of temporary wages, lodging, equipment rentals, and other short-term expenses tied to a shoot. When filming ends, much of that spending leaves with it. What matters for taxpayers is how much tax revenue actually makes its way back to the state.

On that measure, film subsidies perform poorly almost everywhere they have been tried. Research summarized by the Tax Foundation estimates governments recapture between eight and twenty-eight cents in new tax revenue for every dollar of credit issued. Even Georgia, often cited as the model for film incentives, struggles to demonstrate that the program pays for itself. A 2020 performance audit by the Georgia Department of Audits and Accounts found that tax revenue generated by film production activity fell well short of the credits the state awarded.

There is also a basic budget reality lawmakers should keep in mind. Film tax credits are sometimes treated as something different than spending because the state only grants them after a production films in Missouri. But the fiscal effect is the same. Each credit issued is a commitment to collect less revenue in the future.

Meanwhile, the productions most closely associated with Missouri often film somewhere else entirely. A new HBO series set in St. Louis, DTF St. Louis, was filmed in Georgia. The Netflix series Ozark, which was set at Missouri’s Lake of the Ozarks, was also largely filmed in Georgia.

Though it should go without saying, Missouri’s lawmakers should be focused on using state tax dollars as effectively as possible. And there’s no disputing that film tax credits have repeatedly failed that test. Extending the credit today would mean ignoring the state’s past experience and choosing to repeat it.

The post Missouri’s Film Tax Credits Still Don’t Add Up appeared first on Show-Me Institute.

David Stokes, Elias Tsapelas, and Avery Frank join Zach Lawhorn to break down the latest from the 2026 Missouri legislative session, including updates on the push to eliminate Missouri’s income tax. They also discuss why the film tax credit doesn’t work out for Missouri taxpayers, which provisions of the early literacy bills are still moving forward, the growing debate over data center incentives and energy demands, and more.

Listen on Spotify

Listen on Apple Podcasts 

Listen on SoundCloud

Produced by Show-Me Opportunity

The post Income Tax Elimination, Early Literacy Bills, and Data Centers in Missouri appeared first on Show-Me Institute.

A version of the following commentary appeared in the Columbia Missourian.

Missouri, like many states, mandates that a certain share of electricity come from renewable energy sources. Those sources typically include solar, wind, and biomass—but in many states, including Missouri, they exclude nuclear energy.

A productive debate could be had about whether state government should issue any such mandates. But in the meantime, legislators in Jefferson City have introduced several bills using different approaches, each of which would broaden Missouri’s existing standard to include nuclear energy.

Governor Kehoe discussed the issue in his recent State of the State Address, recognizing the long-standing mismatch between policy and reality.

What Is Missouri’s Current Policy?

Missouri’s current renewable portfolio standard (RPS) mandates that no less than 15 percent of each electric utility’s sales come from generated or purchased renewable energy resources (such as solar, wind, biomass, small hydropower, and other non-nuclear sources certified by the state as a renewable). Many other states have adopted similar standards.

Justifications for RPSs vary. Some view them primarily as a tool to improve air quality or limit greenhouse gases. Others argue that portfolio standards help newer energy technologies compete with established fossil fuels or ensure a diverse and resilient mix of energy sources. In any case, if Missouri is going to have an RPS, nuclear energy should be included.

Is Nuclear Energy Clean?

If Missouri’s RPS exists in order to protect the environment, nuclear energy’s exclusion is unreasonable.

Nuclear energy is a zero (or near-zero) emissions energy source, in terms of both criteria pollutants (those that affect air quality) and greenhouse gases.

Further, to produce the same level of electricity, solar farms need 31 times more land than nuclear plants, while onshore wind farms need 173 times more land. In terms of total direct and indirect land use, nuclear is by far the most efficient.

What About Nuclear Waste?

This concern is common but often misguided. Nuclear energy does produce waste, but the waste is compact, carefully managed, and tightly regulated. Much of what is labeled “waste” still contains usable energy. In fact, only about four percent of nuclear fuel is truly unusable after each use, and the United States could reduce nuclear waste in terms of both volume and radioactivity if the industry recycled used fuel. While existing American nuclear power plants are not well equipped to use spent fuel, new advanced reactor designs are increasingly capable of using it to generate electricity.

Regardless, the presence of safely stored waste should not prevent nuclear energy from being included in an updated portfolio.

Government Interference in the Energy Market

Past arguments have held that subsidies level the playing field for renewable energy. Yet, while solar and wind have expanded rapidly in recent years, only seven nuclear plants have been constructed in the U.S. since 1990. Factors such as regulatory burden have also contributed to nuclear energy’s stagnation, but government interference has played a role. Subsidies, tax-credits, and mandates have actually significantly distorted the market in favor of renewables.

The lion’s share of the more than $80 billion in federal support for renewables came through tax expenditures—driven overwhelmingly by the investment tax credit (ITC) for solar projects, which is claimed when a project begins operation, and the production tax credit (PTC) for wind generation. State RPSs create guaranteed demand for these resources, while federal tax policy lowers the cost of supplying them—effectively a double incentive.

This is not to argue that nuclear energy should be subsidized to a similar degree. However, including nuclear energy in Missouri’s RPS would at least make existing policy more even-handed. Nuclear energy meets growing electricity demand cleanly and reliably. The Missouri Legislature should update the state’s RPS to recognize this fact.

The post Missouri Should Update Its Renewable Portfolio Standard to Include Nuclear Energy appeared first on Show-Me Institute.

TO THE HONORABLE MEMBERS OF THE COMMITTEE

Thank you for the opportunity to testify. My name is Elias Tsapelas, and I’m the Director of State Budget and Fiscal Policy at the Show-Me Institute, a nonprofit, nonpartisan, Missouri-based think tank that advances sensible, well-researched, free-market solutions to state and local policy issues. The ideas presented here are my own and are offered in consideration of proposals that will affect tax credits in Missouri.

Senate Bill 1079 consolidates Missouri’s existing film and series production tax credit sub-caps into a single $16 million pool for both, leaving the state’s total commitment the same. The only substantive effect of the bill would be to give the Film Office more flexibility in how the same dollars are allocated. That flexibility does not address the fundamental problem with this program.

Current and Past Tax Credit Failures

Despite the Missouri film tax credit’s recent revival, our state has a long history with this troubling incentive. Until its sunset in 2013, Missouri’s previous iteration made promises similar to what supporters are touting today. Missouri’s own Tax Credit Review Commission recommended the credit be eliminated because it served too narrow an industry and failed to provide a positive return on investment.¹

Research confirms that pattern holds nationally. Film tax credits have not resulted in job growth, have not affected market share or industry output, and have produced only short-term wage gains for those already in the industry.² Credits in many states generated just cents on the dollar. As one Tax Foundation analyst notes, “non-favored activities and businesses remain on the hook to bear the full impact of the state’s tax code.”³

The Missouri Film Office has pointed to the number of projects approved and production spending in the state as evidence the program is working, but that is not the right measure for determining whether the program is a good investment for state taxpayers.⁴ The relevant question is how much the state receives back in tax revenue and broader economic activity—and by that measure, the research is consistent: film tax credits do not generate a positive return.

The Competitiveness Argument Doesn’t Hold

Supporters of SB 1079 argue that pooling the sub-caps will make Missouri more competitive for productions. Even setting aside the ROI question, that argument doesn’t hold.

Steven Conrad, the showrunner who created a new HBO series set in St. Louis and filmed it entirely in Atlanta, recently suggested that governments may not be well-served by chasing the film industry at all.⁵ His observation reflects a structural reality: Georgia has spent two decades building the studios, crews, soundstages, and production infrastructure that make large productions possible. Missouri has not. No reallocation of $16 million changes that.

Georgia’s own state auditor found that even Georgia’s fully developed, deeply established program returned just 10 cents to the state for every dollar of credit granted, producing a net revenue loss of $602 million in a single year.⁶ If one of the most mature film-incentive programs in the country cannot generate a positive return on investment, a program at a fraction of its scale operating in a state without comparable infrastructure has no prospect of doing so.

Targeted Credits Are Poor Economic Policy

Targeted economic development tax credits are just another way for lawmakers to pick winners and losers, a job that is better left to consumers in the market. When tax breaks are given to some, other taxpayers have to make up for the lost revenue. The impulse to do something to support an industry is understandable, but tax credits are a poor substitute for the conditions that make industries thrive organically. A dollar of film tax credits reduces state revenue by exactly the same amount as a dollar of direct appropriations—the difference is that credits bypass the appropriations process and receive less scrutiny.

Prioritize Tax Relief That Benefits All Missourians

Missouri is already a national leader in state spending in the name of economic development. Over the past few decades, Missouri has forgone billions in state tax revenue in favor of a host of narrow incentives that have consistently shown poor results. In FY2025 alone, Missouri redeemed more than $961 million in tax credits—nearly double the $521 million redeemed in 2010.⁷ The General Assembly is simultaneously weighing whether to eliminate the state income tax, a reform that would deliver broad economic benefits to every Missourian. The legislature should consider whether a growing tax credit portfolio is consistent with that goal. Expanding targeted credits that erode the income-tax base works against broad-based tax relief, and Missouri would be better served by pursuing the latter.

The film tax credit is a small program, but it exemplifies the approach to tax policy that makes comprehensive reform harder to achieve. Tax credit programs have not been successful in Missouri in the past, there is little evidence to suggest the film tax credit is succeeding now, and there is no reason to believe this program will perform differently under a restructured allocation. If increasing economic opportunity is the goal, the research is clear: Instead trying to manufacture more opportunities at the expense of taxpayers, lawmakers should provide broad-based tax relief to every Missourian.

NOTES

1. “Report of the Missouri Tax Credit Review Commission.” Missouri Tax Credit Review Commission. 2010; https://www.semissourian.com/files/tcrcfinalreport113010.pdf.
2. “Lights, camera and no action: How state film subsidies fail.” USC Press Release. August 18, 2016; https://pressroom.usc.edu/lights-camera-and-no-action-how-state-film-subsidies-fail.
3. Loughead, Katherine. “Illuminating the Hidden Costs of State Tax Incentives.” Tax Foundation. 2021; https://taxfoundation.org/state-tax-incentives-costs.
4. “Made-in-Missouri Film and TV Productions Spent $40.7 Million in 2025.” Missouri Department of Economic Development. February 2026; https://ded.mo.gov/press-room/made-missouri-film-and-tv-productions-spent-407-million-2025.
5. Neman, Daniel. “HBO’s DTF St. Louis has a dream cast, but it wasn’t shot here.” St. Louis Post-Dispatch. February 26, 2026; https://www.stltoday.com/life-entertainment/local/movies-tv/article_cfa2d34c-435a-40fd-9fa5-75933d716915.html.
6. “Impact of the Georgia Film Tax Credit.” Georgia Department of Audits and Accounts, Performance Audit Division. Report No. 18-03B. January 2020; https://www.audits.ga.gov/ReportSearch/download/23536.
7. “Fourth Quarter Tax Credit Report, Fiscal Year 2025.” Missouri Department of Revenue. 2025; https://dor.mo.gov/public-reports/documents/Fourth-Quarter-FY25-Tax-Credit-Report.pdf.

The post Senate Bill 1079: Film Tax Credits appeared first on Show-Me Institute.

TO THE HONORABLE MEMBERS OF THE COMMITTEE

Thank you for the opportunity to testify. My name is Elias Tsapelas, and I’m the Director of State Budget and Fiscal Policy at the Show-Me Institute, a nonprofit, nonpartisan, Missouri-based think tank that advances sensible, well-researched, free-market solutions to state and local policy issues. The ideas presented here are my own and are offered in consideration of proposals that will affect tax credits in Missouri.

House Bill 2142 consolidates Missouri’s existing film and series production tax credit sub-caps into a single $16 million pool for both, leaving the state’s total commitment the same. The only substantive effect of the bill would be to give the Film Office more flexibility in how the same dollars are allocated. That flexibility does not address the fundamental problem with this program.

Current and Past Tax Credit Failures

Despite the Missouri film tax credit’s recent revival, our state has a long history with this troubling incentive. Until its sunset in 2013, Missouri’s previous iteration made promises similar to what supporters are touting today. Missouri’s own Tax Credit Review Commission recommended the credit be eliminated because it served too narrow an industry and failed to provide a positive return on investment.¹

Research confirms that pattern holds nationally. Film tax credits have not resulted in job growth, have not affected market share or industry output, and have produced only short-term wage gains for those already in the industry.² Credits in many states generated just cents on the dollar. As one Tax Foundation analyst notes, “non-favored activities and businesses remain on the hook to bear the full impact of the state’s tax code.”³

The Missouri Film Office has pointed to the number of projects approved and production spending in the state as evidence the program is working, but that is not the right measure for determining whether the program is a good investment for state taxpayers.⁴ The relevant question is how much the state receives back in tax revenue and broader economic activity—and by that measure, the research is consistent: film tax credits do not generate a positive return.

The Competitiveness Argument Doesn’t Hold

Supporters of HB 2142 argue that pooling the sub-caps will make Missouri more competitive for productions. Even setting aside the ROI question, that argument doesn’t hold.

Steven Conrad, the showrunner who created a new HBO series set in St. Louis and filmed it entirely in Atlanta, recently suggested that governments may not be well-served by chasing the film industry at all.⁵ His observation reflects a structural reality: Georgia has spent two decades building the studios, crews, soundstages, and production infrastructure that make large productions possible. Missouri has not. No reallocation of $16 million changes that.

Georgia’s own state auditor found that even Georgia’s fully developed, deeply established program returned just 10 cents to the state for every dollar of credit granted, producing a net revenue loss of $602 million in a single year.⁶ If one of the most mature film-incentive programs in the country cannot generate a positive return on investment, a program at a fraction of its scale operating in a state without comparable infrastructure has no prospect of doing so.

Targeted Credits Are Poor Economic Policy

Targeted economic development tax credits are just another way for lawmakers to pick winners and losers, a job that is better left to consumers in the market. When tax breaks are given to some, other taxpayers have to make up for the lost revenue. The impulse to do something to support an industry is understandable, but tax credits are a poor substitute for the conditions that make industries thrive organically. A dollar of film tax credits reduces state revenue by exactly the same amount as a dollar of direct appropriations—the difference is that credits bypass the appropriations process and receive less scrutiny.

Prioritize Tax Relief That Benefits All Missourians

Missouri is already a national leader in state spending in the name of economic development. Over the past few decades, Missouri has forgone billions in state tax revenue in favor of a host of narrow incentives that have consistently shown poor results. In FY2025 alone, Missouri redeemed more than $961 million in tax credits—nearly double the $521 million redeemed in 2010.⁷ The General Assembly is simultaneously weighing whether to eliminate the state income tax, a reform that would deliver broad economic benefits to every Missourian. The legislature should consider whether a growing tax credit portfolio is consistent with that goal. Expanding targeted credits that erode the income-tax base works against broad-based tax relief, and Missouri would be better served by pursuing the latter.

The film tax credit is a small program, but it exemplifies the approach to tax policy that makes comprehensive reform harder to achieve. Tax credit programs have not been successful in Missouri in the past, there is little evidence to suggest the film tax credit is succeeding now, and there is no reason to believe this program will perform differently under a restructured allocation. If increasing economic opportunity is the goal, the research is clear: Instead trying to manufacture more opportunities at the expense of taxpayers, lawmakers should provide broad-based tax relief to every Missourian.

NOTES

1. “Report of the Missouri Tax Credit Review Commission.” Missouri Tax Credit Review Commission. 2010; https://www.semissourian.com/files/tcrcfinalreport113010.pdf.
2. “Lights, camera and no action: How state film subsidies fail.” USC Press Release. August 18, 2016; https://pressroom.usc.edu/lights-camera-and-no-action-how-state-film-subsidies-fail.
3. Loughead, Katherine. “Illuminating the Hidden Costs of State Tax Incentives.” Tax Foundation. 2021; https://taxfoundation.org/state-tax-incentives-costs.
4. “Made-in-Missouri Film and TV Productions Spent $40.7 Million in 2025.” Missouri Department of Economic Development. February 2026; https://ded.mo.gov/press-room/made-missouri-film-and-tv-productions-spent-407-million-2025.
5. Neman, Daniel. “HBO’s DTF St. Louis has a dream cast, but it wasn’t shot here.” St. Louis Post-Dispatch. February 26, 2026; https://www.stltoday.com/life-entertainment/local/movies-tv/article_cfa2d34c-435a-40fd-9fa5-75933d716915.html.
6. “Impact of the Georgia Film Tax Credit.” Georgia Department of Audits and Accounts, Performance Audit Division. Report No. 18-03B. January 2020; https://www.audits.ga.gov/ReportSearch/download/23536.
7. “Fourth Quarter Tax Credit Report, Fiscal Year 2025.” Missouri Department of Revenue. 2025; https://dor.mo.gov/public-reports/documents/Fourth-Quarter-FY25-Tax-Credit-Report.pdf.

The post House Bill 2142: Film Tax Credits appeared first on Show-Me Institute.

TO THE HONORABLE MEMBERS OF THE COMMITTEE

Thank you for the opportunity to testify. My name is Elias Tsapelas, and I’m the Director of State Budget and Fiscal Policy at the Show-Me Institute, a nonprofit, nonpartisan, Missouri-based think tank that advances sensible, well-researched, free-market solutions to state and local policy issues. The ideas presented here are my own and are offered in consideration of proposals that will affect tax credits in Missouri.

House Bill 2058 consolidates Missouri’s existing film and series production tax credit sub-caps into a single $16 million pool for both, leaving the state’s total commitment the same. The only substantive effect of the bill would be to give the Film Office more flexibility in how the same dollars are allocated. That flexibility does not address the fundamental problem with this program.

Current and Past Tax Credit Failures

Despite the Missouri film tax credit’s recent revival, our state has a long history with this troubling incentive. Until its sunset in 2013, Missouri’s previous iteration made promises similar to what supporters are touting today. Missouri’s own Tax Credit Review Commission recommended the credit be eliminated because it served too narrow an industry and failed to provide a positive return on investment.¹

Research confirms that pattern holds nationally. Film tax credits have not resulted in job growth, have not affected market share or industry output, and have produced only short-term wage gains for those already in the industry.² Credits in many states generated just cents on the dollar. As one Tax Foundation analyst notes, “non-favored activities and businesses remain on the hook to bear the full impact of the state’s tax code.”³

The Missouri Film Office has pointed to the number of projects approved and production spending in the state as evidence the program is working, but that is not the right measure for determining whether the program is a good investment for state taxpayers.⁴ The relevant question is how much the state receives back in tax revenue and broader economic activity—and by that measure, the research is consistent: film tax credits do not generate a positive return.

The Competitiveness Argument Doesn’t Hold

Supporters of HB 2058 argue that pooling the sub-caps will make Missouri more competitive for productions. Even setting aside the ROI question, that argument doesn’t hold.

Steven Conrad, the showrunner who created a new HBO series set in St. Louis and filmed it entirely in Atlanta, recently suggested that governments may not be well-served by chasing the film industry at all.⁵ His observation reflects a structural reality: Georgia has spent two decades building the studios, crews, soundstages, and production infrastructure that make large productions possible. Missouri has not. No reallocation of $16 million changes that.

Georgia’s own state auditor found that even Georgia’s fully developed, deeply established program returned just 10 cents to the state for every dollar of credit granted, producing a net revenue loss of $602 million in a single year.⁶ If one of the most mature film-incentive programs in the country cannot generate a positive return on investment, a program at a fraction of its scale operating in a state without comparable infrastructure has no prospect of doing so.

Targeted Credits Are Poor Economic Policy

Targeted economic development tax credits are just another way for lawmakers to pick winners and losers, a job that is better left to consumers in the market. When tax breaks are given to some, other taxpayers have to make up for the lost revenue. The impulse to do something to support an industry is understandable, but tax credits are a poor substitute for the conditions that make industries thrive organically. A dollar of film tax credits reduces state revenue by exactly the same amount as a dollar of direct appropriations—the difference is that credits bypass the appropriations process and receive less scrutiny.

Prioritize Tax Relief That Benefits All Missourians

Missouri is already a national leader in state spending in the name of economic development. Over the past few decades, Missouri has forgone billions in state tax revenue in favor of a host of narrow incentives that have consistently shown poor results. In FY2025 alone, Missouri redeemed more than $961 million in tax credits—nearly double the $521 million redeemed in 2010.⁷ The General Assembly is simultaneously weighing whether to eliminate the state income tax, a reform that would deliver broad economic benefits to every Missourian. The legislature should consider whether a growing tax credit portfolio is consistent with that goal. Expanding targeted credits that erode the income-tax base works against broad-based tax relief, and Missouri would be better served by pursuing the latter.

The film tax credit is a small program, but it exemplifies the approach to tax policy that makes comprehensive reform harder to achieve. Tax credit programs have not been successful in Missouri in the past, there is little evidence to suggest the film tax credit is succeeding now, and there is no reason to believe this program will perform differently under a restructured allocation. If increasing economic opportunity is the goal, the research is clear: Instead trying to manufacture more opportunities at the expense of taxpayers, lawmakers should provide broad-based tax relief to every Missourian.

NOTES

1. “Report of the Missouri Tax Credit Review Commission.” Missouri Tax Credit Review Commission. 2010; https://www.semissourian.com/files/tcrcfinalreport113010.pdf.
2. “Lights, camera and no action: How state film subsidies fail.” USC Press Release. August 18, 2016; https://pressroom.usc.edu/lights-camera-and-no-action-how-state-film-subsidies-fail.
3. Loughead, Katherine. “Illuminating the Hidden Costs of State Tax Incentives.” Tax Foundation. 2021; https://taxfoundation.org/state-tax-incentives-costs.
4. “Made-in-Missouri Film and TV Productions Spent $40.7 Million in 2025.” Missouri Department of Economic Development. February 2026; https://ded.mo.gov/press-room/made-missouri-film-and-tv-productions-spent-407-million-2025.
5. Neman, Daniel. “HBO’s DTF St. Louis has a dream cast, but it wasn’t shot here.” St. Louis Post-Dispatch. February 26, 2026; https://www.stltoday.com/life-entertainment/local/movies-tv/article_cfa2d34c-435a-40fd-9fa5-75933d716915.html.
6. “Impact of the Georgia Film Tax Credit.” Georgia Department of Audits and Accounts, Performance Audit Division. Report No. 18-03B. January 2020; https://www.audits.ga.gov/ReportSearch/download/23536.
7. “Fourth Quarter Tax Credit Report, Fiscal Year 2025.” Missouri Department of Revenue. 2025; https://dor.mo.gov/public-reports/documents/Fourth-Quarter-FY25-Tax-Credit-Report.pdf.

The post House Bill 2058: Film Tax Credits appeared first on Show-Me Institute.

Governor Kehoe reinforced his support for MOScholars in his recent State of the State address. Building on the $50 million state investment approved during the 2025 legislative session, the governor is calling for an additional $10 million this year, bringing total funding to $60 million. These public funds will be combined with contributions generated through state tax credits to expand school choice opportunities for families across Missouri. Although MOScholars remains small relative to the size of Missouri’s K–12 student population, this proposed increase is a clear positive step toward a richer and more robust school choice landscape.

The governor also announced that Missouri will opt into a new federal tax credit program designed to operate much like MOScholars, but funded through federal tax credits. Under this program, taxpayers may redirect up to $1,700 of their federal tax liability to support school choice in Missouri. If widely used, the federal credit could significantly expand the pool of available funding—possibly enough to generate meaningful competition within the state’s education system.

These developments provide real cause for optimism about the future direction of education policy in Missouri.

The post Kehoe Continues to Prioritize MOScholars in his State of the State Address appeared first on Show-Me Institute.

Missouri’s budget is growing faster than the state’s economy, and if this troubling trend continues it could soon prove disastrous for state taxpayers.

The Solution

Limit spending growth, increase accountability, and improve budget resilience through reforms that prioritize Missouri’s long-term financial health.

Key Facts

• Missouri’s government is growing faster than inflation, wages, and the state’s population.

• Currently, state budgeting practices actually encourage greater spending.

• Most state budget documents aren’t easy for citizens to find, nor are they available in a form that is easy to use.

• Missouri awards nearly $1 billion each year in tax credits, which are the fiscal equivalent of state spending, completely outside of the normal budgeting process.

• According to Moody’s Analytics, Missouri is one of the least-prepared states in the nation for an economic downturn.

Spending at Record Levels

Missouri’s budget has been growing unsustainably for years, and may finally be reaching a fiscal cliff. After a year when a reduction in spending was promised but not delivered, our state is facing a one-billion-dollar shortfall. Missouri’s Hancock Amendment, which was once thought to provide protections against unchecked government growth, has proved incapable of meaningfully constraining spending. In fact, if Missouri’s budget growth hadn’t drastically outstripped both inflation and population growth over the past five years, the current fiscal crisis could have been avoided entirely.

Current Practices Encourage More and More Spending

Missouri currently uses what is called an “incremental” approach to budgeting, which means that budget items from one year automatically roll over into the next and establish the new baseline for state spending. This practice makes budgeting easier for legislators because it allows them to focus attention on new funding requests, but it also allows many old programs and spending items to escape annual scrutiny. The result is snowballing government growth. Missouri should require legislators to evaluate program effectiveness through performance audits and to regularly use “zero-based budgeting,” meaning that lawmakers must build the state’s budget from square one each year.

You Can’t Fix What You Can’t See

Currently, most state budget documents are difficult to find, hard to interpret, and in a form that requires citizens to manually transcribe the data to be studied. Such hurdles mean that lawmakers and state bureaucrats can act with greater impunity and less oversight. There is no good reason why the documents that detail where taxpayer money is going should not be easy for any citizen to access and understand.

Additionally, Missouri leads much of the nation in the subsidization of private entities with state tax dollars, yet there’s little to no mention of these subsidies in the yearly budget. Last year, Missouri awarded nearly $1 billion in various tax-credit programs with little to show for it. These tax credits are the fiscal equivalent of state expenditures, but because the state forgoes revenue instead of spending it, the credits are allocated completely outside the state’s normal budgeting process. The exclusion of tax credits from yearly scrutiny also removes them from the calculations lawmakers must make when tasked with balancing the state’s budget. A truthful accounting of all tax obligations is required if Missouri is to right its fiscal ship.

Missouri Isn’t Ready for the Next Recession

The boom-bust cycles of state finances create budgetary chaos. Each economic downturn forces elected officials to make difficult spending decisions that can be at odds with the state’s long-term funding priorities. As a result of the 2007-2009 Great Recession, general revenues fell by over $1.2 billion, leading to abrupt cuts in education, corrections, and other spending that lasted for several years after the recession. Almost every other state in the country has a rainy-day fund to help weather these situations, but Missouri’s Budget Reserve Fund is too small and too hamstrung by restrictions to be used in a downturn. In fact, it’s never once been used for this purpose.

Policy Recommendations

• Establish clear and meaningful state program performance metrics that allow for objective assessments.

• Implement zero-based budgeting.

• Make all state budget documents available in easily accessible, machine-readable formats (e.g., in Excel or CSV format).

• Include all tax credits, or tax expenditures, in the state’s yearly budgeting process.

• Create a separate budget stabilization fund with the sole task of stabilizing revenues in the event of an economic downturn. The fund should be large enough to fully replace state revenues during a crisis comparable in magnitude to the Great Recession with strong protections against improper use. Repayment to the fund also should be dependent on the pace of economic recovery.

FY 2026 Operating Budget

With approximately 58% of all state spending devoted to education and healthcare, continued budgetary growth puts enormous pressure on every other state spending priority.

Budgetary Growth: Fy 2016-2025

Missouri’s state spending has grown by more than 58% over the past decade.

The post Budgetary Reform appeared first on Show-Me Institute.

This is not a new concept for Missourians familiar with our similar state-level program, MOScholars.

How the Program Works

Each taxpayer can direct up to $1,700 of their federal tax liability to an SGO in any state rather than sending it to the IRS. While donor contributions are capped, there is no federal limit on the amount an eligible student may receive, or how many students are funded. SGOs determine funding allocation based on pre-set rules (evenly, tiered by income, etc.).

Participating SGOs must be federally recognized, legitimate nonprofits (not private foundations), and the governor or another state authority must approve the list of eligible SGOs. In Missouri, the State Treasurer’s Office approves organizations for MOScholars, so it may also have this role for the federal program as well.

State Participation

The federal program requires states to opt in to this new program. I expect Missouri will, but we have not declared our intent to participate at this point. The tax credit is slated to become available beginning in 2027.

If Missouri opts out, Missouri SGOs would not be eligible to receive or distribute federal funds. This means no Missouri students could benefit from the program. However, Missouri residents could still claim the federal credit by donating to an SGO in another participating state.

Participating in this program would complement MOScholars and bring even greater choice, flexibility, and opportunity to families around the state.

The post What the New Federal K-12 Tax Credit Program Could Mean for Missouri appeared first on Show-Me Institute.

On July 10, 2025, Keith Kehrer and Derek Rose, lawyers from Bryan Cave Leighton Paisner, joined Show-Me Institute Director of Research Susan Pendergrass for a presentation on how the MOScholars program operates, followed by a Q&A session.

In 2021, the Missouri General Assembly created the MOScholars program, allowing individuals and businesses to receive state tax credits for contributions to certified educational assistance organizations (EAOs). But what does that mean for your Missouri tax bill?

In this recorded webinar, you’ll learn:

• What the MOScholars program is and who it helps

• How Missouri tax credits work, and how you can direct your tax dollars

• What qualifies as an EAO

• What to do at tax filing time

• How your participation supports school choice in Missouri

The post The MOScholars Program: Why and How to Participate appeared first on Show-Me Institute.

The post The Final Weeks of the 2025 Session appeared first on Show-Me Institute.

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As Missouri’s budget conference committee finalizes its priorities, one investment stands out as both strategic and essential: restoring the governor’s proposed $50 million for the MOScholars program in House Bill 12. This tax credit–funded scholarship initiative expands educational opportunity across the state, especially for students who need it most. In recent polling, two out of three Missourians expressed support for the MOScholars program, and it’s time for the state to commit to it.

MOScholars provides scholarships to eligible K–12 students, particularly those from low-income families or with special educational needs, so that they can attend the school of their choice—whether public, private, or homeschool. By doing so, the program empowers parents, promotes educational freedom, and drives innovation across the education landscape.

Currently, the program is entirely donor funded. It was launched with a $25 million cap, and the six Missouri organizations that raise the funds and grant the scholarships have been working hard for the past few years to serve as many students as possible. The state committing to an appropriation of $50 million would help clear waiting lists, provide stability to scholarship-granting organizations, and ensure that more students can benefit from the learning environments that best suit them.

Giving families more options can lead to healthier competition, better outcomes, and stronger public education systems. States with robust choice programs have shown that when families are empowered, all schools—district, charter, and private—tend to improve.

Moreover, the scholarship expansion would especially benefit rural families, who too often are left out of school choice conversations. By including micro-schools and homeschool supports, MOScholars brings flexible options to small towns and agricultural communities where traditional alternatives are limited.

This is not just about education policy—it’s about economic opportunity, parental rights, and long-term prosperity. A child’s ZIP code or income level should not determine the quality of their education. Missouri’s leaders have the chance to deliver real change by restoring the $50 million commitment to the MOScholars program.

The post MOScholars Program Remains a Worthwhile Investment appeared first on Show-Me Institute.

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It is first worth noting that job creation figures from economic development agencies are often misleading, with creative accounting used to inflate the numbers. And the numbers almost never account for the possibility that these “created” jobs would have happened with or without subsidies. Numerous academic studies have shown that economic development programs rarely work as advocates claim.

But just for the sake of argument, let’s take the numbers at face value. If we divide the jobs created by the incentives provided, the cost amounts to roughly $49,500 in taxpayer money for each job. Is that expense worth it?

Consider this: according to the Bureau of Labor Statistics (Table 6), Missouri’s economy added 589,337 jobs in calendar year 2023.* In other words, the ordinary functioning of the state’s economy produced roughly 125 times more jobs than the Department of Economic Development’s incentive programs. The DED’s contribution is a tiny fraction of the state’s overall job creation—and it comes at a substantial cost.

The price tag goes beyond the incentives themselves. The total department budget for salaries is $14.6 million for approximately 202 full time employees, meaning taxpayers not only footed the bill for the incentives but also paid for the administrative costs of distributing them. It’s an expensive way to do something the broader economy already does more effectively.

Perhaps it’s time to rethink the role of the Missouri DED. Those funds could be redirected to areas that deliver tangible benefits to all Missourians, like roads, schools, or public safety. Instead of propping up a costly system that yields meager results, Missouri could invest in the essentials that make the state a better place to live and work.

*NOTE: The BLS statistics I cite offer both gross job gains and gross job losses. I cite only the gross gains. A fair-minded person might suggest a more accurate approach is to calculate net job gains by subtracting gross job losses from gross job gains. I would agree with that in most cases. However, economic development professionals do not make a habit of acknowledging job losses. For example, it is often the practice to count as “new” a job that may have only changed location. Until economic development advocates provide a more rigorous accounting of jobs “created,” using BLS numbers on gross job gains is the best comparison.

The post Missouri Economic Development Incentives Aren’t Worth It appeared first on Show-Me Institute.

The proposal rests on shaky assumptions about the effectiveness of economic development subsidies. Tax credits and similar incentives have a long history of overpromising and underdelivering—even according to analyses from people supporting the projects!

These programs often enrich developers without producing significant long-term benefits for the communities footing the bill. Take, for example, the myriad subsidies for corporate headquarters and downtown stadiums in Kansas City. Despite their hefty price tags, these deals leave taxpayers shouldering higher costs with little to show for it in terms of jobs or economic growth. St. Louis risks again following the same path—throwing public money at developers while failing to address the underlying issues.

A major problem with subsidies like this is that they create a false sense of market demand. The St. Louis Post-Dispatch quotes one of the bill’s sponsors, Missouri Senator Steve Roberts, as saying, “The demand for more downtown residential is clear.” If that were true, private investors should already be stepping up. Developers should not need government support to pursue profitable opportunities.

Subsidy programs also suffer from a lack of transparency and accountability. Often, there are no robust safeguards to measure their success or clawback provisions when promises go unfulfilled. Without clear benchmarks and regular public reporting, these programs devolve into blank checks for developers.

St. Louis should focus on making the downtown area a desirable place to live by prioritizing public safety and basic city services. Addressing crime, for instance, would do far more to draw new residents and businesses than funneling public money into speculative real estate projects.

A smarter approach to revitalizing downtown St. Louis would let market forces lead the way. City leaders can play a supportive role by streamlining permitting processes and reducing regulatory barriers, making it easier for developers to pursue worthwhile projects. (There are some small, hopeful signs St. Louis is heeding this call.) At the same time, investments in public safety, infrastructure, and essential services would lay the groundwork for organic growth that benefits everyone—not just developers.

Yes, St. Louis needs more residents. Yes, increasing the downtown population would have all sorts of positive economic effects. But right now, too few people want to live there, and nothing will work until that changes first.

The post Downtown St. Louis Doesn’t Need Subsidies appeared first on Show-Me Institute.

In the April 23, 1960, editorial “Twin Principles,” the paper declared, “There cannot be any real question that payment of tax funds directly or indirectly to support private church schools would violate the principle of separation between church and state.”

Responding via a letter to the editor five days later, James Bick, the president of Citizens for Educational Freedom, noted the error in this claim. He wrote:

When tax-provided educational benefits are given to all children for the non-religious elements of their education there is no violation of the separation of Church and state principle. Aid is given to the parent and child. The parent has the freedom to expend his benefits at the school of his choice. This is the principle under which tuition grants were made under the “G.I. Bill.” The United States Supreme Court used the same principle in deciding the Everson vs. Board of Education Case (1947) concerning school bus transportation.

It took more than 40 years, but the U.S. Supreme Court used exactly the logic laid out by Bick when deciding the Ohio voucher case of Zelman v. Simmons-Harris. There is no violation of the separation of church and state when parents are provided the opportunity to choose their children’s school, even if it is a religious school.

In a recent Post-Dispatch article, you’ll find another mistake. The reporters writing the article label the MoScholars program a “voucher.” Undoubtedly, they know this is the language used by those who stand against school choice. A voucher implies that the state is giving direct aid, in the form of a voucher, to pay for private school. This is not the way the MoScholars program works. It is supported by donations, and those making the donations are then eligible for a state tax credit. These donations provide education savings accounts to parents who may choose to use them at private schools—but parents can also use the money for a variety of other purposes, such as tutoring, online classes, or special education services, to name a few.

To find out more about the MoScholars program and how you can make a tax credit donation or apply for a scholarship, visit the Missouri State Treasurer’s website.

The post Wrong Then, Wrong Now—the Post-Dispatch and School Choice appeared first on Show-Me Institute.

When a new tax credit program is approved, it provides a real tax incentive for some favored business (e.g.. film, construction, manufacturing, agriculture, etc.), while also promising future benefits to the state. For those approving the credits (lawmakers), one perk is that the cost of doling out the incentive doesn’t have to be included in the state’s yearly spending plan (because they aren’t technically expenditures). Even better, since the promised return from the state’s investment is in the future, there’s no real way to measure whether the credits fulfill their end of the bargain. In other words, there’s basically no transparency on the cost or benefit side of the tax credit equation.

Are there good reasons why our government should treat spending tax dollars today as fundamentally different from agreeing not to collect them? Economically, they’re the same. For taxpayers, there’s little difference except that spending is subject to Missouri’s balanced budget requirement, which means that that our government can’t agree to spend more than will be brought in via tax revenues. Economic development tax credits have no such limitation.

While there may be some practical reasons for keeping tax credits out of the state’s budget, I can’t imagine that including them would be too difficult, because it’s already how a few agricultural tax credits are treated. Ultimately, it seems to me that when economic times are tough, it would be a good idea for lawmakers to have as many options as possible. Being able to weigh the benefits of subsidizing, for example, movie production via tax credit, against other spending priorities such as education and health care would be a positive move for our state.

Going into 2024, if lawmakers are serious about reining in the state’s out of control spending, shining a brighter light on where each state tax dollar is going (whether spent or foregone) would be a great place to start. Real transparency would mean that Missouri’s economic development tax credits can no longer hide their true trade-offs in the dark.

The post Tax Credit Trade-offs appeared first on Show-Me Institute.