An article in today's Kansas City Star discusses the rewritten economic development bill, which was just approved in the special session of the General Assembly. As been stated in a previous blog, interest groups lined up for a chance at a government subsidy for their industry:
A long line of interest groups urged lawmakers Tuesday to approve new
and expanded subsidies for developers, cattle ranchers, small business,
rural business and numerous other types of business.
Also, in response to testimony by Tom Kruckemeyer, chief economist for the Missouri Budget Project, about possible damage the tax credits could cause the Missouri budget, state Rep. Will Kraus said something that throws economics out the window:
"Economic development is driven by tax credits"
Kraus should know that lasting economic development is driven by smart tax policy i.e., lowering taxes and simplifying the tax code. Reducing taxes across the board allows all businesses to benefit, rather than just a few industries. This would cause job expansion in all parts of the economy.
The harms of tax credits for targeted industries have been discussed on this blog and at the the Show-Me Institute frequently. The fact that other states are offering tax incentives does not mean we should do it as well. Missouri should take the lead in showing how economic growth happens through broad-based, common-sense tax and economic policy, not through giving handouts to favored industries.