Jim Lembke writes today about some current events in the Missouri Senate regarding tax credits and reform.
Over the past four years the debate over tax policy in the general assembly has been like climbing mount Everest. At the end of the day, both sides desire has been to put forth policies that create jobs and grow our states economy. Easier said than done. This important debate has earned the general assembly in particular the senate the label of “dysfunctional”.
It is important to have some history and context when considering the direction that will best serve our state and the taxpayers who pay the bills. Over the last 30 years Missouri and her neighboring states have taken a path that competes for jobs by trying to pick the next emerging industry or by planning growth and development.
If we have learned anything by this lengthy experiment it is that government is not very good at central planning or picking winners and losers. That said, this does not mean that someone did not benefit from these policies. Through the creation of 61 targeted tax credit programs, many businesses, developers and wealthy taxpayers have reaped the rewards of mercantilism.
This direction and the decisions made by legislative leaders in both parties have put Missouri on path to mediocrity. Our revenues and growth have been dismal. Our GDP has lagged behind our neighbors. Our slow growth in population has cost us representation in congress.
It seems that term limits again may be the producer of change. The personality of the senate has shifted dramatically. That metamorphosis has allowed movement in the area of tax policy. Only time will tell if that movement is in the right direction.
Tuesday night the senate perfected SB 120. This bill takes the first step in accomplishing something that has not been done in the last 4 years as this debate has evolved. It creates four (4) new targeted tax credit programs.
These programs have familiar goals. They place government and central planners at the apex of job creation and economic development. As stated earlier that has not been working well for Missouri.
In addition to creating four (4) new tax credit programs, SB120 attempts to put new caps on a number of existing programs. This effort is in response to the concern of many legislators that these programs have grown out of control causing uncertainty in the budget process every year. It is important to note that in this fiscal year there have been record redemptions of $629 million from these targeted, tax credit programs.
The supporters of SB120 point to these new caps and their savings as justification for creating four (4) new give-a-way programs. To their credit, reducing the size of targeted, tax credit programs that benefit a small select group is a step in the right direction.
Here is the concern. SB120 has just passed its first hurdle in the legislative process. As it makes its way to the House it will without a doubt change. It will likely put on the weight of additional tax credit programs, and lose the only good thing about the bill, the savings. If the House restores the caps to their current level or even close making this bill revenue neutral, it should die a quick death when it goes back to the senate.
The bottom line is SB 120 is taking our state in the wrong direction. Our focus should be on bills like SB26 that take a global look at our tax policy. We need to have a tax policy that serves all Missourians by being fair, moral and equitable. Good tax policy will make for good economic development policy.