Sinquefield: Some tax credits are bad
In a missive sent out today, mega-political contributor Rex Sinquefield offers his thoughts on the mega-tax break bill moving through the Legislature.
He doesn’t like it.
Sinquefield’s article, co-written with University of Missouri-Columbia economist Joe Haslag, takes aim at the unprecedented subsidy being considered for Montreal-based Bombardier Aerospace.
State officials are trying to persuade the company to build an aircraft plant near Kansas City International Airport. The lure: up to $40 million a year in tax credits for 22 years.
Sinquefield and Haslag dispute the argument that the state recoups its investment in such deals through greater individual income and sales taxes and through the “multiplier” effect.
“Unfortunately, this almost certainly is wrong,” they write.
They say the state’s general fund gets 3 cents to 4 cents from every dollar of goods and services produced in the state. Thus, for the state to break even, the economy has to produce between $25 and $33 worth of goods and services for every dollar of tax credit granted, they say.
“While some projects may produce such robust yields, there are no guarantees,” they say. A better strategy, they say, would be to eliminate the income tax altogether, one of Sinquefield’s priorities.
The article is headlined “Tax Credits Aren’t Always A Good Idea.” Presumably that is to distinguish the Bombardier deal from the tax credits that Sinquefield has been pushing to give scholarships to special-needs children to attend private schools.
His Show-Me Institute site has his studies on these issues.
Bombardier’s proponents are sure to argue with Sinquefield’s analysis. They say the aircraft deal is unique because the company would actually repay the credits when it begins production. However, the bill is vague on just when and how that would happen.
(3 votes, average: 4.33 out of 5)
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I would have to agree with Sinquefield and Haslag on this plan. Its frightening to me that some people think that Missouri can actually afford this kind of gamble. This would cost the state millions of dollars that we don’t have!
This would be the largest tax credit in the state and a foreign company would benefit. There is no guarantee Missouri would see the growth they predict. Either our taxes would go up to pay for this or other state services would see cuts.
I hope, for the sake of our great state, this does not pass.