The Kansas-Missouri border war has led to yet another tax incentive-fueled move. The big winner this time? Teva Neuroscience, which will move from Kansas City, Mo.,  to Overland Park, Kan., next year.

We have reached absurd levels of tax incentive parrying on the western side of the state. Teva’s current location is an 8-minute drive down the highway from its new location at the corner of College and Nall. As the crow flies, that is a move of fewer than 4 miles.

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It is clear that Missouri’s economic development status quo has been neither effective nor efficient, so I would propose a new plan: Do not participate in the taxpayer-funded tax incentive bidding wars that have companies being traded like baseball cards and have seen the state hemorrhaging tax dollars over the last decade. Simply state the reason why companies should stay in, and come to, Missouri clearly for all companies who want to find a predictable, business-friendly, and stable economic environment to set up and maintain shop.

How about ending the corporate income tax? I have noted in the past that swapping development tax credits for a wholesale elimination of the corporate income tax would be a far better approach to developing the state’s economy. As my colleague Michael Rathbone has noted, only three states in America do not have a corporate income tax or a gross receipts tax. Corporate income taxes are among the worst taxes you can institute if you are looking to pursue policies that promote economic growth. The transition could be accomplished in no small part by scrapping a development plan that has failed for more than 10 years.

Stop picking winners and losers. Missouri and Kansas officials are playing a game of economic futility when they chase companies and escalate the “targeted” tax incentive bidding wars. Both states need to wise up, but especially if Kansas continues on its path, Missouri needs to change the game — and not play on the old terms anymore.

Missouri’s major dailies have had quite a run over the past few days. Last week, the Kansas City Star told readers that the state’s governor needed “to promote reasonable revenue-enhancing measures” — taxes — and put more money toward state programs. The notion of “government investment” features prominently in the piece, as increasingly has become the case when “revenue-enhancing measures” are suggested, post-Stimulus. What the editorial board does not say is that the city’s own local taxes are already among the highest in the region.

Stratospheric municipal taxes overlaid with an even higher state tax burden? This will not turn out well.

But yesterday, the St. Louis Post-Dispatch, the Star’s cross-state peer, spectacularly one-upped the Kansas City paper. The law constrains Missouri legislators on how much they can tax and spend each year, and Missouri is billions of dollars below the limit. How much of that difference would the Post-Dispatch like to spend?

All $4 billion of it.

A lot of folks purchased Mega Millions lottery tickets last week dreaming about what they could do with $640 million. Imagine what $4 billion would do for Missouri.

Let’s be clear: That is a radical tax hike proposal, tucked into what is otherwise an uninspired editorial about state and local governing responsibilities. Combined state and local tax rates have stayed roughly the same for decades in Missouri, but the Post-Dispatch would have those rates hurdle skyward to provide more public services and somehow, some way, improve the economy above the status quo.

Even the suggestion that raising taxes and then spending more would help the state makes no sense by the newspaper’s own standards. State and local tax rates have actually increased slightly since 1980, the apparent “good ole days” implied in the editorial, from 8.6 percent then to 9 percent today. The newspaper cannot even claim that plummeting tax burdens are the reason Missouri is suffering economically, because, by its own metric, taxes have actually increased over the last 30 years.

The proposal is mostly academic here in Missouri, as taxpayers and policymakers would blanch at the thought of such a hike, but the suggestion is still troubling. If implemented, the plan would have awful real-world implications — giving families less to spend and taking capital out of the market for use in less productive government programs. It is a roadmap to ruin, and yet the Post-Dispatch apparently does not see it.

“Imagine what $4 billion would do for Missouri”? No, imagine if lawmakers took their cues from Missouri’s newspapers. What a nightmare that would be.

We noted in February that we saw some legislative activity in the Missouri House intended to revive, at least in part, 2011’s moribund Aerotropolis legislation, which suffered long before dying in last year’s special session. Since then, there has been no obvious movement regarding the project — until this week.

Two different stories on Aerotropolis are now circulating. The first came out Tuesday and dealt with efforts in the state legislature to once again drive state tax credits to the project. It looks like House leaders may try to tuck Aerotropolis back into an economic development package that the chamber is preparing.

The second story was published this morning and is the more fascinating of the two. It reveals that Saint Louis County may apply $3 million in casino tax revenues to support the Aerotropolis project. If true, the funding source would certainly be apropos, given that Aerotropolis almost certainly is a gamble. Over the last year, Audrey Spalding and I (as well as Chrissy Harbin) have discussed at length the merits (or lack thereof) of Aerotropolis, a project that originally clocked in at a cool $480 million when it was first proposed. That figure is worth keeping in mind as proponents of the Aerotropolis plan pine for state money. Taxpayers have been told that Aerotropolis “needed” a half billion dollars to take flight; then $360 million; and then just $60 million. Maybe Aerotropolis should not receive any money from taxpayers?

This also may be a case of life imitating art, as this Show-Me Institute PSA (narrated by our own Rick Edlund) makes clear.

No doubt, a plethora of interest groups are still actively campaigning to resurrect Aerotropolis, but proponents have still failed to make the case that 1) the Aerotropolis plan will work, and 2) public money is required to resolve some market failure standing in the way of the project’s success. Last year, it looked like private parties just wanted to gamble with the public’s money. “A game changer at $480 million! A bargain at $360 million! Just $60 million will do the trick! How about $3 million?”

It sounds like we have a problem gambler on our hands. Maybe the best thing to do is to simply cut them off.

In February, I wrote about a bill that would renew an onerous mandate on kindergartner and first grader eye exams in Missouri: a mandate which only two other states in the country impose. I voiced my concerns about the bill, not only because of the costs it would unnecessarily impose on Missouri families — health insurance does not typically cover the eye exams and they generally would have to be paid out of pocket — but because of the inconsistency inherent in a state imposing one health mandate while vociferously opposing another health mandate that the federal government is imposing. Earlier this month, I even delivered testimony about the proposal before the Senate Education Committee, which was considering whether to send the proposed law to the floor of the Missouri Senate. Since then, I have been following the issue closely.

Well, yesterday the Education Committee told Missouri families where it stands, voting to not send the bill to the full Senate for further consideration, meaning the bill is effectively dead — for now, anyway. The House is still considering substantially similar legislation, and there are technical pathways through which this legislation could be resurrected or otherwise attached to other bills, and thus reconsidered. I will be on the lookout for all such activities, but the good news is that the prospects for the bill are now very bleak.

Kudos, Senators. There are more effective and efficient ways of promoting eye health for Missouri’s children than through the mandate contemplated here. The Committee made the right decision.

It seems like only yesterday that I was calling Kansas City’s trolley plans a slow motion train wreck, yet the city appears to have already outdone itself in recent hours; not a foot of track has been laid downtown, and plans are already underway to more than double the size of the project and extend the proposed streetcar line south another 3 miles to the Country Club Plaza.

What could go wrong?

Councilman Russ Johnson has filed a resolution that would direct City Manager Troy Schulte to apply for a Federal Transit Administration grant to study extending the proposed streetcar line to the Country Club Plaza and University of Missouri-Kansas City area.

The current proposal has the line running a 2.2-mile route from River Market to Crown Center. The second leg would add a little more than three miles.

City officials apparently feel they need to go straight to ludicrous speed with this crazy train proposal, but basically all of the same objections apply to the new plan as the old. Kansas City’s streetcar plan attempts to satisfy a market demand for transit that does not exist along the proposed route and will cost at least — and now, potentially far more than — $100 million to get off the ground. In addition, despite city promises, the plan will make the city less competitive, not more competitive, with a spike in local taxes.

Is this really what Kansas City needs to be investing in right now? The Kansas City Star’s Yael Abouhalkah recently noted that Kansas City has the second-worst debt service burden among the largest cities in the region and one of the highest tax burdens. Why would the city aggravate concerns that are already making it less competitive, and why on Earth would they double down on such a plan?

We have reached the last day of oral arguments for the Patient Protection and Affordable Care Act (PPACA), a.k.a., Obamacare. Two issues remain before the U.S. Supreme Court.

First, is PPACA severable — that is, if one part of the law is unconstitutional, may the rest of the law remain, or must the entire law be thrown out? Readers can find extended coverage on the severability issue here.

Second, is PPACA’s Medicaid expansion constitutionally permissible? Congress’ broadening of Medicaid’s eligibility rules affects not only the federal budget but the budgets of the states, which, along with the federal government, fund state-managed Medicaid programs. By expanding the pool of who can receive Medicaid, Congress is raising the states’ costs; the states’ contributions to the program would have to increase to pay for the greater number of beneficiaries. That is bad news for already tight state budgets. Medicaid is a “voluntary” program technically, but practically, states have come to rely heavily on the federal dollars associated with the program. Foregoing PPACA’s Medicaid expansion provisions also probably means foregoing those federal dollars.

Therein lies the issue: Do PPACA’s revisions to Medicaid, which expand the program’s eligibility requirements, constitute permissible federal pressure on the states stemming from Congress’ spending power, or does it go beyond “pressure,” constituting “compulsion” in violation of the 10th Amendment? For those following the arguments at home, listen for whether and how the justices use the word “compulsion” during the hearing. If the Court believes the changes to the law are “compulsion,” it may be inclined to say the Medicaid expansion goes too far, violating the 10th Amendment.

The Court is expected to rule on this week’s oral arguments in June or July.

Tomorrow, the United States Supreme Court continues hearing arguments regarding the Patient Protection and Affordable Care Act (PPACA), a.k.a., Obamacare. This time, the Court will consider the arguments related to the “main event” of the hearings: the constitutionality of the law’s individual mandate. The individual mandate requires every American, with a few exceptions, to purchase a government-approved health insurance plan, or be forced to pay a fine.

Modern jurisprudence has increasingly allowed the federal government to regulate commerce that is not of an obviously interstate nature. The issue here is that PPACA goes further and regulates the non-purchase of a good or service. Rather than simply regulating the manner in which the health insurance market will operate, PPACA requires that everyone in the country buy something, or be fined. Under this paradigm, market participation would no longer be required for regulation under the Commerce Clause; instead, and in a very real way, the feds would subject you to a purchase requirement merely for being a living, breathing American.

That is a problem. Having a health insurance plan makes sense, but compelling Americans to buy a health insurance plan through heavy-handed federal coercion is awful policy and arguably unconstitutional. Reading into the U.S. Constitution a federal right to demand purchases from its citizens would eviscerate many of the limits on government power enshrined in that document.

If the federal government can require individuals to purchase health insurance, what can’t the federal government require us to purchase? Ilya Somin, a law professor at George Mason University who has filed a brief with the court, contends that if PPACA passes constitutional muster, then Congress could pass “a broccoli mandate, a car-purchase mandate, really any other mandate that you’d want.” Where is the line against such coercion drawn if not by the plain meaning of the Constitution?

Proponents of PPACA have dismissed the suggestion that the federal government would impose a “broccoli mandate,” arguing that the federal government would never try to expand a mandate to purchase goods and services into such areas. But Americans should not have to entrust their freedoms to the word of politicians and bureaucrats, well-meaning or not.

There is no “just trust us” clause in the Constitution. The Constitution is the check that keeps capricious leaders from doing capricious things, and should remain so.

Beginning on Monday, the U.S. Supreme Court will hear oral arguments on the Patient Protection and Affordable Care Act (PPACA,) also known as “ObamaCare.” In all, six hours over three days have been allotted for the parties to make their cases for and against the law. A marathon hearing schedule like this is not unprecedented, but it is not typical, either.

Each day will focus on a different aspect of the law being challenged. The order of oral arguments, according to the Washington Post, is as follows:

• Monday: The Anti-Injunction Act (AIA)
• Tuesday: The individual mandate
• Wednesday: Severability, Medicaid expansion

The first session will deal with whether the penalty for not obtaining health insurance is a tax. Under the Anti-Injunction Act, the government typically must levy a tax before it can be challenged. If the Court finds that the PPACA penalty is in fact a tax, the earliest anyone could challenge it would be after it is imposed, which would be 2015 — the year after the mandate goes into effect. Such a ruling might frustrate PPACA supporters and opponents alike, as the law would remain in limbo for several more years, or until Congress changes the law.

Both the government and the states now agree that the penalty is not a tax, and although it is not especially likely that the Court will conclude that the AIA would prevent the Court from reviewing the law at this time, it still could happen. Moreover, the AIA issue, despite its questionable merits, does have a certain appeal. If the Court wants to avoid a highly-charged election-year ruling, this issue would provide a handy escape hatch for the Court.

Next week, the United States Supreme Court will hear oral arguments on the Patient Protection and Affordable Care Act (PPACA,) the huge health care overhaul that Congress passed two years ago this month. One of the main talking points in favor of the legislation at the time was that it would improve the economy. However, as the Washington Examiner reports, the White House implicitly backed off that claim this week. Indeed, evidence from the Congressional Budget Office suggests the law will actually reduce employment, not increase it.

PPACA’s negative economic effects only compound the problems of a slow recovery in which young people in particular are hurting financially. The official unemployment rate in the United States is 8.3 percent, but for people ages 16-25, it is almost double that, at 16.5 percent. The Wall Street Journal describes the situation as “Generation Jobless,” and while college graduates have better opportunities than non-college graduates, they are still making less and saving less than if they had graduated in better economic times. There is no doubt that people of all ages are suffering, but unemployment during some of the most important wealth-building years could be disastrous when today’s young adults are ready to retire — both personally and for the country.

Unfortunately, PPACA only worsens the situation because it raises taxes. Yesterday, Americans for Tax Reform highlighted the (at least) four tax hikes contained in PPACA which hurt young people. The first two are especially troubling to me: the “excise tax,” for not buying a government-approved insurance plan; and the “medicine cabinet tax,” which prevents people from using flex accounts and Health Savings Accounts to pay for non-prescription, over-the-counter medicine. The former penalizes people for not purchasing a government-approved health insurance plan; the latter reduces choice and flexibility with one’s personal health dollars.

Young people are less likely to draw deeply on prescription medication benefits or other health care services than older and less healthy policyholders. The result? The government forces young people to pay for insurance plans that they do not need and will not use, and prevents them from taking full advantage of HSAs — health care dollars they would control and manage as part of their own personal budgets. Essentially, the government is forcing young people to subsidize the health care of others during some of their most economically fragile years.

That is bad policy and bad news for young people. PPACA may be marketed as “reform,” but it harms young people, who already are hurting economically, by raising costs and reducing choice.

Last year I wrote about a proposal to build a new streetcar that would travel along Main Street in Kansas City. At the time, I was highly skeptical of the fiscal prudence of the plan. What has happened since then? Well, another city-subsidized transit line that serves many of the same areas that the trolley would serve has fallen behind on its loan payments due to lack of ridership. Furthermore, the businesses that the proposed train would serve do not want to get stuck with the bill for it.

A government project that will not make money and its presumed customers do not want to subsidize? Over to you, City Council.

Council members late Thursday unanimously approved three measures that establish a streetcar zone for two blocks on either side of Main Street {…}. The measures … also remove a requirement that private development within the zone provide off-street parking, a move aimed at encouraging use of the streetcar and other public transit.

The rezoning is considered a necessary step as the city races to meet a March 19 deadline to apply for as much as $25 million in federal grants to help pay for the estimated $100 million project.

In short, the city’s rushing the project through to get federal dollars, with the balance of the bill coming from new taxes. It is worth noting that the residents in the trolley district who would be voting on the proposed property and sales tax increases for the project will not necessarily be the ones paying the tax, because the business owners do not necessarily live where their businesses are located. That has some entrepreneurs pretty irked. Says one property owner, “My biggest concern is taxation without representation.”

“The people who vote on it live in the apartments and lofts,” Nicholson said. “The people who pay don’t have a say. I’ve always been a supporter of streetcars, but it’s a community asset, and having business owners pay for it is problematic.”

In any case, when the people who presumably stand to benefit from the trolley do not want to pay for it, should anybody be paying for it? And if the tax is implemented as planned, how will local businesses respond? It seems the city is out of sync with even its own projects and objectives; after all, why would the city plan to build a new hotel downtown — and then turn around and raise downtown hotel taxes to the second-highest in the country to fund the trolley? Wouldn’t these initiatives be working against each other, and even if they did not, isn’t one bad idea enough for the city to take on at one time?

The trolley did not make sense in September, and it still does not make sense.

Two weeks ago I wrote about Norwood Hills Country Club in Saint Louis, which in 2006 was issued a $1.1 million Historic Preservation Tax Credit (HPTC) from the state of Missouri. Rarely do you see an extensive write-up about the “whys” and “hows” of an individual tax credit, but in July 2005, the industry publication Club & Resort Business wrote a long story about the renovations at Norwood Hills and how the club got the tax credits which helped pay for it. The article offered indispensable insight into the club’s internal tax credit discussions, with the apropos headline, reused above, “Norwood Hills CC: No Sweat and Plenty of Gain.” Notably (emphasis mine):

The two-and-a-half-year process of applying (to both state and federal agencies) was arduous and intensely bureaucratic . . . But in February of this year [2005], Norwood Hills was finally notified that it did indeed qualify to be included on the registry. And with the honor came a huge financial benefit: specifically, the ability to earn tax credits for 45 cents of every dollar spent on the renovation project.

How did the club get 45 cents on the dollar? The state HPTC offers 25 cents on the dollar for qualifying renovation expenses, but the federal version of the HPTC offers an additional 20 cents on the dollar for those expenses. At the Show-Me Institute, we talk a lot about state incentives because we are, after all, a state-focused think tank. However, taxpayers should understand that there oftentimes is more than just state money involved in renovation and building projects like this — so much government money, in fact, that nearly half of the cost of a multi-million dollar renovation to a private golf club could be underwritten with tax credits. Have taxpayers gotten their money’s worth? I report, you decide.

One other noteworthy tidbit from the article is that the original idea of making Norwood Hills a Historic Place came from a real estate developer — who apparently did not think Norwood Hills was that historic of a place (emphasis mine):

Another huge boost to the renovation project came after a Norwood Hills member who is a real estate developer suggested that the club, which hosted the 1948 PGA and has a long and rich connection with St. Louis-area social history, look into the possibility of applying for placement on the National Registry of Historic Places. Successfully securing that status, the developer member advised, would then qualify Norwood Hills, which operates as a for-profit corporation, for renovation tax credits.

“[The member] felt we could qualify not so much because of the club’s history or architecture, but because of the distinction of our members in the St. Louis community through the years,” Wright says.

If Norwood Hills as a place was not itself historic, what exactly was the Historic Preservation Tax Credit preserving? “History” is no doubt in the eyes of the beholder, but for taxpayers on the outside looking in at Norwood Hills, what they gained in this process is of considerable interest, sweat or no sweat.

Licensing laws are typically seen as a way to ensure that members of a profession are well-trained and, thus, their customers well-served and protected. But could overly restrictive licensing rules actually be bad for customers’ health? There is reason to believe so; restrictive and ambiguous Missouri licensing requirements in health care have kept, and are keeping, at least one charitable medical group that provides free medical care to the needy from operating freely in the state. That group: Remote Area Medical (RAM).

The brainchild of British transplant Stan Brock, RAM started as a relief service abroad. But for many years it also has turned its services inward to help America’s neediest, providing medical care to those who otherwise would not have received it. Brock told 60 Minutes in a 2008 report (featured above) that his organization “operate[s] entirely on the generosity of the American people.” Like so many families, stretching those sometimes “little checks” is how RAM makes ends meet. In addition, thousands of highly-trained and medically-licensed volunteers have traveled the country assisting Brock’s work for decades by providing their professional services free of charge.

Yet a recurring stumbling block as RAM visits states is artificial barriers to entry – that is, state laws that prevent out-of-state volunteers from easily donating their medical expertise because of burdensome, and sometimes expensive, licensing requirements. During a phone call last week, Mr. Brock told me that RAM wanted to do more in Missouri, but onerous state requirements — such as requiring licensed in-state medical personnel to participate in a clinic before RAM could provide its services — had stifled his organization on several occasions. Most recently, he said, Missouri regulations prevented RAM from providing free eyeglasses to the southwest corner of the state.

But Missouri could make it easier for groups like RAM to help the state’s neediest if officials relax licensing rules and explicitly allow medical professionals licensed in other states to provide their services for these charitable endeavors. Tennessee has led the way on this policy front.

In 1995, Tennessee enacted the “Volunteer Health Care Services Act,” a reform of its medical licensing law which allowed relief organizations like RAM to bring out-of-state medical professionals to help Tennessee’s poor without putting professionals licensed in their home states through an arduous and unnecessary process of re-licensing. If a doctor is licensed to practice in her home state, RAM can bring that doctor to provide her services free of charge to Tennessee’s medically-underserved. It is, in short, a clear and unambiguous law that ensures the state’s neediest are served ably and safely.

The good news? The reform movement appears to be spreading, with a handful of states following Tennessee’s lead in whole or in part. Oklahoma has reformed its laws to accommodate organizations like RAM, and more recently, Connecticut and Illinois passed legislation that allows organizations like RAM greater access to its neediest citizens. Arizona currently is taking up a reform of its own laws.

Tennessee’s law is a model for the country – and a model that Missouri, one of Tennessee’s neighbors, would do well to emulate. Allowing organizations like RAM to freely enter Missouri would go a long way towards improving care to Missouri’s underserved. When burdensome licensing laws and medical regulation interfere with the delivery of skilled, safe, and desperately needed services to America’s poor, the system is in need of reform. For Missouri, relaxing licensing laws for charitable groups like RAM would be a step in the right direction.