The Show-Me Institute has detailed many times what pro-growth tax policy looks like. In short, tax structures that let all taxpayers retain their money rather than just the favored few are superior to those that pick winners and losers. Unfortunately in Missouri, we spend more in economic development tax credits than we take in with the corporate income tax (CIT). Cronyism in this state has gotten so bad that you could completely eliminate the CIT by not handing out these special interest tax breaks, and you would still have tax credits remaining.
That extraordinary liability provides the state with a great opportunity — to pursue deep, substantive, and pro-growth tax cuts while mitigating their budgetary impact. I trust Missourians to invest their money more than the state to invest it on their behalf. Unfortunately, some in the Missouri House of Representatives appear to disagree (emphasis mine):
A Missouri House committee has approved a tax-credit reduction plan, but it stops short of the significant cuts passed by the Senate.
The legislation endorsed Thursday by a House panel would impose a $135 million annual cap on tax credits for historic renovation projects. That could essentially allow the program to continue as is, since it issued a total of $134 million of tax credits last year.
A Senate bill passed last week would impose a $50 million annual cap on historic tax credits.
The Historic Preservation Tax Credit (HPTC) returns 23 cents for every dollar the state plows into it. This, like so many other “development” tax credits, is a special interest money pit, not an investment. It is an affront to good governance that the House would impose a “reform” that fails to reform anything. That the House appears prepared to continue this destructive status quo by also creating new tax credits and maintaining others is beyond disappointing.
Missouri needs tax reform. It needs it now. Tax credits are central to that conversation, but it seems the House may want to talk about something else. That is very, very unfortunate.
