Monsanto, headquartered in Missouri, is considering an expansion, and Iowa has come a-courtin’.  Monsanto employs about 4,100 people in the St. Louis area, and Missouri is trying to throw a tax credit-festooned hat into the ring.

Legislation last session hoped to revive the research and development tax credit to offset a company’s R&D costs.  The R&D tax credit program was abolished after a state audit found it lacking oversight.

Some say that tax credits are a necessary evil: It’s not fair that some businesses, especially hefty ones, get a tax break while others don’t, but how will we ever compete with other states wielding massive tax packages?

It is tricky not to play the tax credit game.  Large companies who play have very little to lose by feigning interest in this state, now that state.  But state taxpayers have everything to lose when our tax revenue goes under the knife. Individual taxpayers and small businesses get soaked because they don’t pack the same political punch as a big corporation.

And even if Missouri had dangled the R&D tax credit carrot, there’s no guarantee Monsanto would choose Missouri, or had ever even considered expanding in Missouri.  Many companies pit states against one another just to get the most tax relief possible – but that’s what businesses do!  They look for ways to cut costs and get a better return on investment.  They look for ways to stay in business and profit.  If you told me I could threaten to move and my tax bill would shrink, I’d do it too.

So what’s the alternative?  I think the key is in offering a highly competitive tax structure for ALL businesses and workers who support Missouri with jobs and productivity.  Not only would Missouri attract existing business with its no income tax status, but we’d have a better climate for entrepreneurial activity, too.

Businesses have said in no uncertain terms that they will seek out favorable tax climates.  Instead of flaying our revenue to give breaks to just the companies that Missouri lawmakers feel are important, why don’t we provide equitable relief to every company creating jobs for Missouri workers?

Our tools matter, and how well we use them matters.  Not taxing income in Missouri is a way to win the tax credit war without losing our shirt.