Kansas – really? Yes – Kansas! It’s bad enough that Missouri loses businesses to Tennessee . . . but Kansas?
The Kansas City Star reports that yet another Missouri company has left downtown Kansas City for the nearby Sprint Campus in Overland Park, KS. The reason for the move? In Kansas, the company gets to keep 95% of its employee payroll taxes. The employees still have to pay the taxes, of course, but the company gets to keep the money. Hmmm.
It’s interesting that Missouri and Kansas fight to give away their revenue. Missouri offers programs similar to those in Kansas, whereby employers get to keep their employees’ payroll taxes or a portion thereof. You can’t blame the states for offering such incentives when you have such poor tax policy to begin with – like the income tax. Compound this with Kansas City’s and St. Louis’ earnings taxes, and you have a recipe for disaster.
Under a better policy, our state would not tax the fruits of people’s labor through an income tax! One current proposal for tax reform is to eliminate the individual income tax and replace it with a consumer-driven sales tax.
One of our neighbors, Tennessee, found the key to success more than 70 years ago: Don’t tax income, but rather let consumers decide the taxes they pay via their choice of consumption items.
How’s that working for Tennessee? Let’s look at some numbers.
We know that Missouri lost a congressional seat following the 2010 Census, even though our population grew by more than 7% in the last decade. Tennessee got to keep its nine (9) congressional seats, and it outgrew Missouri by more than 50%. The following chart, developed from Census Bureau data, shows that movers are choosing Tennessee over Missouri.
OK, so more people moved to Tennessee than to Missouri – why should we care? Consider this: Those businesses and families take their jobs and their wealth with them! Wealth is leaving Missouri at the same time that wealth is going to Tennessee. More wealth equals more spending on many things, including jobs. Tennessee far surpasses Missouri in the number of companies with 1,000 or more employees.
Opponents of tax reform ignore the fact that Tennessee is a real-world working model. The Missouri version of the Tennessee model will generate adequate revenues to fund the functions of state government, provide a stable revenue source, increase job opportunities, and provide an immediate and permanent increase in take-home pay for everyone who pays state income taxes.
Everyone would benefit from the more vibrant state economy created by this proposed change in tax policy – even the naysayers!