The Municipal League Is on a Roll
Not content with the Missouri Municipal League putting the good of government over the good of the people by trying to block much-needed reforms to our eminent domain laws (yeah, yeah, I know that the “government” is “us” — would somebody please tell the muny league that?), the St. Louis County Municipal League is attempting to pass a use tax on county citizens and businesses. From the article in the Post-Dispatch:
Dooley said he was acting on behalf of the St. Louis County Municipal League, which wrote to Dooley last week seeking his support of the tax.
Here is my testimony on the subject, which I gave in June to the county commission considering these issues. The imposition of a use tax on county businesses will wipe out one of the competitive advantages that St. Louis County has, and just add incentives for businesses to move to St. Charles. Perhaps I shouldn’t care. The county (and, even more so, the cities within it) can always just give away more tax breaks to favored businesses once they pass the higher taxes on to all of them. That certainly sounds like the basis for good policy …
St. Charles already has a use tax.
Comment by little leaguer — August 21, 2008 @ 11:51 a.m.
I don’t think David is making a strict comparison of use tax disincentives, here. After all, he points out in his linked testimony that “One competitive advantage Saint Louis has over Saint Charles … is its lack of a use tax.”
The point is that both jurisdictions each have unique opportunity sets — their own varied piles of benefits and drawbacks to doing business. The use tax in St. Charles is one of the drawbacks to locating a business there, but for many business owners that drawback is outweighed by any number of other benefits that they wouldn’t have in St. Louis.
If St. Louis were to institute its own use tax, it wouldn’t be moving to a level playing field with St. Charles — it would be adding one more drawback to its already-significant pile. For some unknown number of St. Louis business owners, that extra drawback would be enough to push them over the benefit/drawback margin and spur them to move to St. Charles.
It won’t be a deciding factor for all business owners, or even a majority. But when determining the potential effects of an incremental change like a use tax, it’s important to consider it as one factor within a wider opportunity set — and realize that it’s pretty much impossible to predict exactly how many business owners might fall within the marginal set that will decide to switch jurisdictions.
Comment by Eric D. Dixon — August 21, 2008 @ 12:58 p.m.