This week, the Missouri Senate debated Senate Bill 120, which reforms a number of the state’s tax credit programs and creates new incentives to promote economic development. This is an issue that has been debated extensively in recent years, and while most agree something should be done to reduce the amount we’re spending on these programs, finding a consensus on how to go about that has been much harder.

I’m neither staunchly for nor against tax credits. I take it on a case by case basis. Some, like benevolent tax credits, are incredibly beneficial to Missouri citizens. Others are a gross waste of state funds that do little to actually encourage economic activity.

We have more than 60 tax credit programs. Most were created in more robust economic times, when the state was running at a surplus. Things have obviously changed. We’re now dealing with an incredibly tight budget. Despite this, though, these credits have lived on, slowly strangling our state’s ability to invest in other important areas like education and transportation. We spent more than $620 million on tax credits last year alone, and the price tag for these programs increases every year.

Senate Bill 120 reins in two of the largest tax credits—Low-Income Housing and Historic Preservation—by placing caps on the programs. It also creates a number of new tax incentives to support data centers, freight forwarders and angel investors in start-up businesses.

The problem, though, is there is little evidence that tax credits have a positive impact on a state’s economy. They’re also an incredibly inefficient way to support businesses. We should be striving to create a level playing field and promote measures that benefit all businesses.

Instead, we spent hours debating a measure that will overwhelmingly help only a handful of the state’s largest businesses and industries, most in the metro areas. The bill also fails to add some much-needed oversight to these programs. There is a huge disconnect between what we’re told these programs will do, and what they actually do. We’re promised these credits will perform economic miracles, bringing in thousands of jobs and shoring up our economy. Few come even close to meeting the expected benefits, mostly because we get our economic impact estimates from the companies applying for the tax credits. Of course they inflate the numbers; it’s in their best interest. Meanwhile, it’s the taxpayers who pay the price when a project fails to live up to its initial promise.

We should be looking at measures that will create real, long-term jobs for our citizens. Small business owners account for the majority of new jobs created. We should look at legislation that will help the companies that are the backbone of our economy. Instead of throwing millions at a handful of companies through tax credit programs, we should examine a tax cut to benefit everyone in Missouri.

Senate Bill 120 was an opportunity for us to have a real debate about the merits of our tax credit programs and how we want to address economic development going forward. I’m disappointed we didn’t take the time to really weigh the pros and cons of these programs. It’s the kind of conversation we need to start having.

Contact Me

I always appreciate hearing your comments, opinions, and concerns. Please feel free to contact me in Jefferson City at (573) 751-2459. You may write me at Wayne Wallingford; Missouri Senate; State Capitol; Jefferson City, Mo. 65101, or email at wayne.wallingford@senate.mo.gov or www.senate.mo.gov/wallingford.

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