Our Opinion: Do we follow Kansas off tax-credit cliff?
Tuesday, January 29, 2013
Should Missouri follow another state’s poor example?
The tax-incentive border war between Missouri and Kansas has escalated to such an extent that Kansas incentives have created a budget shortfall.
The sparring between the states is reminiscent of the stereotypical mother’s admonition to a child’s rationale in the following exchange.
Child: “Well, my friend Joey is allowed to do it.”
Mom: “If Joey jumped off a cliff, would you jump off a cliff?”
We’re not opposed to Missouri’s reasonable use of tax credits and other incentives as an economic development tool.
We repeatedly have urged Missouri lawmakers to act on comprehensive reform — after thorough debate and analysis of a committee report on the state’s 61 tax credit programs.
What we have cautioned against is an escalating tug-of-war where victory is determined not by which state wins, but by which loses less.
Kansas, you may recall, in December dangled $5 million in tax credits to lure an insurance company to move its Kansas City, Mo., office across the state line.
Although those types of incentives appear to have taken a toll on the Kansas budget, some Missouri lawmakers are poised to respond.
Some discussion points are contained in a recent report from Good Jobs First, which describes itself as a non-profit, non-partisan research center based in Washington, D.C.
Although we are wary of groups that may hide an agenda behind such a characterization, here’s what its executive director, Greg LeRoy, had to say:
• “The result (of the border war) is a vast waste of taxpayer funds, paying for the geographic reshuffling of existing jobs rather than new business activity. By pretending that these jobs are new, public officials and the recipient companies engage in what amounts to interstate job fraud.”
• “The costs are high and the benefits are low, since a tiny number of companies get huge subsidies for moving what amounts to an insignificant number of jobs. The flip side is job blackmail: the availability of relocation subsidies makes it possible for companies that have no intention of moving to extract payoffs from their home states to stay put.”
The report concludes with the recommendation that “states should stop subsidizing companies for existing jobs that are treated as ‘new’ simply because their location has changed. The study reveals that the vast majority of states already know how to do this: four-fifths of the states already refuse to pay for intrastate job relocations.”
We understand the need to be mindful of what our neighbors are doing, but we urge Missouri lawmakers to focus on what’s best for us.