Show-Me Institute Policy Analyst Patrick Ishmael did a fine job yesterday of discussing Missouri Gov. Jay Nixon’s new tax giveaway idea for Boeing. Here is the legislation from the Missouri House of Representatives that would authorize these new incentives. Here are a few highlights:
- Project must create 2,000 new jobs within 10 years.
- Programs that will give out subsidies: Missouri Works Program, Missouri Business Use Incentives for Large Scale Development (BUILD), Missouri Works Training Program, and the real property tax increment allocation redevelopment.
- Benefits will not be included in any calculation of caps for these programs (e.g., if under this law, BUILD were to issue $5 million in tax credits, it would not count against the program’s $25 million annual cap).
- Total benefits cannot exceed $150 million annually.
A quick back-of-the-envelope calculation finds that if a company created the minimum 2,000 jobs and if maximum benefits were paid out annually, the total subsidy would amount to $75,000 per job per year. Now, that’s just a simple calculation and it is not certain that the entire $150 million would be paid every year, but you get the picture.
If the state is willing to forgo $150 million in revenue every year (the bill has no language about offsetting the lost revenue), then why not just cut the corporate income tax in half? Last year, the corporate income tax brought in $360 million. If the state can live without $150 million to benefit one industry (and really, it’s more like one company), then can’t it live without $180 million to benefit corporations from all industries? It just makes more sense when you think about it.