A recent Wall Street Journal article notes the increasing push from state governments to eliminate or reduce personal income taxes. This article reinforces a previous point the Show-Me Institute made that a state’s tax environment does not occur in a vacuum. A state’s position regarding taxes can decline compared to its neighbors, even if it keeps its tax rates the same. Missouri recently eliminated the corporate franchise tax and yet it still risks falling behind other states who are taking even bigger steps toward lowering their tax rates.

Missouri Gov. Jay Nixon takes great pride in not raising taxes to close the state’s budget shortfalls. However, where is the big push for income tax reform in the governor’s agenda? In the Executive Budget for fiscal year 2013, Nixon does propose, among other things, $4 million to provide loans or other investment tools to help high-tech businesses create jobs through the Missouri Science and Innovation Reinvestment Act (MOSIRA) and $10 million for the State Small Business Credit Initiative to increase the amount of private capital made available to small businesses. Yet, there is no push to cut taxes across the board and these spending initiatives sound like the same tired and retread policies the state has taken when it comes to economic development (they also are not very successful; Missouri ranks 49th out of 50 states in job creation).

Kansas is looking to cut taxes, so is Oklahoma, while Tennessee has no personal income tax. These states are making the RIGHT moves to be more competitive and business-friendly. The governor should follow suit.

Regarding health care, Missouri’s legislature is getting it right on at least one front. On the one hand, it is working to close legal loopholes that could allow a health insurance exchange to be implemented unilaterally in the state capitol, either by administrative or gubernatorial fiat. There are lots of reasons to oppose implementing an Obamacare exchange in the state, but there should be little dispute that if it is going to be implemented, it needs to go through the proper legislative channels.

What should raise concerns, however, is whether state legislation that mandates optometrist eye exams for incoming kindergartners is right for Missouri. At least one state commission does not think so, which does not even begin to address the philosophical consistency question implicit in the move. The St. Louis Post-Dispatch reports (emphasis mine):

Calling the law ineffective and a financial burden on families, a state commission recommended that legislators drop the exam and instead beef up vision screenings by school nurses. The state’s eye physicians and surgeons embraced that approach.

Optometrists, however, are mounting a big push to get the Legislature to renew the exam requirement, which is slated to expire this June. The Missouri Optometric Association has hired 11 lobbyists. More important, they have a key ally: House Speaker Steve Tilley, an optometrist.

Tilley, R-Perryville, put the optometrists’ bill on a fast track — it is headed to the House floor after a packed committee hearing last week — while he bottled up the alternative, the school nurse bill, by not referring it to a committee.

Caught in the political crossfire are families who may have to shell out $100 for a child’s eye exam, because private medical insurance generally won’t cover it.

The chair of the Children’s Vision Commission, Oscar Cruz, is not impressed about the merits of the current law. “It’s a political process, unfortunately,” he said. And then there is the fiscal note.

The fiscal note on the optometrists’ bill suggests the state could use a $99,000 appropriation earmarked for blindness screening and treatment to pay for exams for about 6,637 uninsured kindergartners and first-graders in districts without kindergarten.

But that would average out to only $15 an exam. Mickey Wilson, director of the Legislature’s Oversight Division, said the analysis assumes that some optometrists would do the tests for free, or at a reduced cost.

That sounds like an awfully big assumption, and it does not even answer concerns for insured children whose plans would not cover the exams, the cost of which would fall to Missouri’s parents. The commission notes that outfitting school nurses to perform eye care screenings makes more sense.

Cruz said screenings by school nurses catch about 95 to 97 percent of eye problems that can damage vision on a long-term basis. Forcing 65,000 kindergartners a year to get comprehensive eye exams, he said, is “an incredible waste of resources.”

Only two other states — Kentucky and Illinois — have similar eye exam mandates. Is imposing an onerous mandate on Missouri families really the right course, especially as the legislature (very publicly) fights the onerous Obamacare mandate? The inconsistency should cause some pause.

The St. Louis Convention & Visitors Commission (CVC) just released its proposal (estimated price tag: $124 million, with the St. Louis Rams football team paying $64 million) on how it will transform the Edward Jones Dome into a “first-tier” stadium. If it fails to reach an agreement with the St. Louis Rams, the Rams will have the option to break their lease with the city and relocate.

For those who may be wondering what exactly “first-tier” means, the Edward Jones Dome must be in the top 25 percent of all NFL facilities regarding some established criteria, such as: Fan amenities (box suites, club seats, lounges, etc.), technical areas (scoreboards, lighting, sound, etc.), and revenue-generating facilities (shops and concession stands). Considering that stadiums qualifying as top-tier include the newly-built Cowboys Stadium (price tag: $1.2 billion, with the Dallas Cowboys football team paying $875 million) and MetLife Stadium (price tag: $1.6 billion), the Edward Jones Dome has a long way to go to qualify. In fact, according to Patrick Rishe of Webster University, the cost of upgrading the Dome to “first-tier” status would be, at a minimum, $200 million-300 million (the cost of construction for the Edward Jones Dome was $280,000,000 in 1992 dollars). That is significantly more than the estimated $124 million in the CVC’s proposal.

Thus, officials for Saint Louis City, Saint Louis County, and Missouri have a decision on whether to pay up or face the prospect of the Rams leaving Saint Louis. I would urge the city, county, and state to forgo the use of any public money for upgrades to the Dome for several reasons. The first reason is on principle; the Rams are privately-owned and yet want public money for one of their facilities. If the Rams want a first-tier stadium, they should make a first-tier investment (and put a first-rate team on the field).

Second, even if city, county, and state officials wanted to pay for the upgrades, where are they going to get the money? The state is not exactly awash in cash, and the situation in the county is not much better. Both Missouri Gov. Jay Nixon and the state legislature have ruled out tax increases to help close the budget gap and I highly doubt they will go back on that in order to keep the Rams in Saint Louis. The city, county, and state could issue bonds (the state, at least, has a great credit rating), but they are still paying off ($12 million for the state and $6 million each for the city and county every year until 2021) the bonds issued to build the Edward Jones Dome. Does it make sense for the city, county, and/or state to go further into debt to keep the Rams in Saint Louis for another 10 years? Besides, when Kansas City and Jackson County helped fund renovations to Arrowhead Stadium, Jackson County struggled to keep up with the debt payments. Why put Saint Louis City and/or Saint Louis County in that kind of risky position?

Finally, even if the city, state, and/or county had the money, the use of public funds for sports stadiums does not generate much economic activity. According to a St. Louis Federal Reserve publication, the weight of economic evidence shows that the taxpayers do not get much of a return on their investment. In fact, the Federal Reserve study referred to another study:

Baade found that of the 30 metro areas where the stadium or arena was built or refurbished in the previous 10 years, only three areas showed a significant relationship between the presence of a stadium and real per-capita personal income growth. And in all three cases—St. Louis, San Francisco/Oakland and Washington, D.C.—the relationship was negative.

Considering these reasons, what justification can officials for the city, county, and/or state give for further expenditures on behalf of the Edward Jones Dome?

There have been numerous suggestions on how to cure Missouri’s budget deficit this year. Last month, the St. Louis Post-Dispatch’s editorial board suggested that one of the best ways to close the gap is for the state to decline to redeem — that is, decline to apply against a taxpayer’s tax burden — tax credits presented to the state. Holders of tax credits would have to wait until the next year, or possibly beyond, to use their certificates. At the time, I was skeptical of the move, mostly because it was not clear that such a decision is, in fact, legal.

But now former Missouri Supreme Court Justice Mike Wolff is lending some credence to the idea, writing in the Post-Dispatch that not only would the move be legal, it would be preferable to cutting other state programs:

If the governor or the Legislature declared a holiday on accepting tax-credit coupons in payment of taxes, the state would not be reneging on its promise to accept tax credit coupons to pay taxes. The state simply would be saying, “wait until next year.”

Should the state pay interest on tax credits that are on holiday for a year (or more, perhaps)? For example, when a taxpayer eventually is allowed to use its $10 million in tax-credit coupons, which the taxpayer bought for the discounted amount of about $9 million, perhaps the state should pay interest because the tax-credit owner has had to wait. Because these tax credit certificates are bought and sold through banks, perhaps the passbook savings account rate should apply. At the current generous rates, that might cost the state 1 percent or less per year.

But what if the taxpayer does not want to spend cash to pay its taxes because it needs the $10 million to rebuild its jet plane’s engines or to refurbish the yacht? Not a big problem, actually, because remember, the tax credits can be sold. But can these $10 million in tax credits be sold for the taxpayer’s original price of $9 million? Well, probably not, there could be a further discount; markets work, even markets for tax credits.

If Justice Wolff’s idea was implemented, it might help Missouri’s budget problem for a year, but it would not solve the underlying problem: tax credit issuances run amok. In fact, declining to redeem tax credits could actually compound budget problems in future years if other reforms are not implemented to reduce the state’s forthcoming and outstanding tax credit liabilities; tax credits that have been authorized or issued but not yet redeemed constitute a multi-billion dollar (that’s “billion” with a “b”) liability that the state will have to pay in coming years. Preventing budget cuts to favored programs — for Justice Wolff, education — does not seem to be a compelling reason to embark solely on his plan. It is almost like trying to get a hamburger today for $1 tomorrow . . . at some point, you have to pay for the hamburger. Tax credits are a recurring problem, the reduction of which could cure other recurring parts of the budget (for example, reducing taxes on all corporations with the savings, rather than picking and choosing winners and losers.)

Keeping all of that in mind, if done in concert with a moratorium on tax credit issuances (ideally including caps, sunsets, and other permanent changes), Justice Wolff’s idea might be workable as part of a larger reform program; over the long haul, such a multi-pronged approach may actually make a real dent in the state’s looming tax credit liabilities, and ultimately save the state money.

Missouri officials cannot just treat the symptoms of the state’s tax credit excesses and defer cuts for later; it must also treat the underlying disease. Trimming tax credits and reducing taxes is a better, forward-thinking solution, and would provide the foundation for a healthier economy and a more stable budget.

Last week, FOX 2 News in Saint Louis reported that the China Hub at Lambert-St. Louis International Airport was essentially dead. The cause? “[T]he big reason seems to be the refusal of the Missouri legislature to approve tax credits for international freight forwarders to operate at Lambert.” Because the original proposal was a half-billion dollar warehouse-laden boondoggle, it is news to me that the $60 million in freight forwarder credits are now “the key.” Show-Me Institute Policy Analyst Audrey Spalding and I have long assumed Aerotropolis would come back in one form or another, and lo and behold, it most certainly has, in the form of . . . freight forwarder tax credits.

We have the same objections as we had last year. If shipping cargo out of Lambert makes economic sense, why do taxpayers need to subsidize it? Why not just lower taxes for all businesses? As the Aerotropolis proposal has shed more of its baggage en route to this latest forwarder credit, it is fascinating that the argument for the project has turned from “we need all of it!” to “just a little will do.” We may have simply just reached the “bargaining stage,” or alternatively are seeing the last-ditch attempts of Aerotropolis supporters to get something, anything out of this mess.

If the freight forwarder credit resurrection affirms anything, it is that tax credits need reform. Indeed, there is ample room to clip the tax credit waste and cut taxes, and we have talked about this issue again and again. It makes no sense to be adding programs to a tax credit system that is already bursting at the seams and rife with tax credits of dubious value. Tax credit redemptions are expected to reach nearly $700 million in 2013 — ranking right up there with this year’s gargantuan budget deficit. And yet, state officials continue trying to pick winners and losers.

Missourians can judge for themselves whether Missouri’s economic development status quo has served them well. It seems the legislature is more than happy to serve up more of the same.

The state of Illinois recently encountered some bad news. Moody’s downgraded Illinois’s credit rating from A2 to A1, the lowest in the country. On the other hand, Missouri has AAA ratings from all three credit agencies. Times have been tough for both states. Missouri is facing a large budget shortfall. Illinois has its own shortfall and it is using payment deferrals to manage its operating cash fund.

I mention our neighbor’s misfortune because it serves as an example of different approaches to handling financial difficulties. Last year, Illinois raised taxes on personal income and the corporate income. Yet, despite these increases, its financial situation continues to deteriorate. In Missouri, the tax rates have remained the same. Missouri Gov. Jay Nixon brags about not raising taxes and personally cutting $1.6 billion in government spending. While both states have a budget shortfall to close, which budget situation would you prefer?

Illinois officials’ reaction to the state’s financial difficulties also presents an opportunity. As I mentioned before, Illinois responded to its dire fiscal situation by raising its corporate income tax. This has already put pressure on the state’s own businesses, and other states (Wisconsin and Indiana) are trying to entice those businesses to relocate into their states. Missouri has had its own methods of trying to encourage companies to relocate to the state, but they tend to be costly. When the Missouri Department of Economic Development (DED) used tax credits to get Applebee’s to relocate to Missouri, the cost was about $35,000 per job.

Instead of handing out millions of dollars in economic development tax credits, why doesn’t Missouri eliminate the corporate income tax? Considering that Illinois just raised its corporate income tax, wouldn’t a corporate income tax cut (if not outright elimination of the tax) serve as a powerful incentive for Illinois companies to move to Missouri?

Missouri officials estimate receiving $352 million in corporate income tax revenue for fiscal year 2013. Missouri officials also estimate that the state will issue more than $450 million ($463,409,492, to be exact) in economic development tax credits for the upcoming fiscal year. A reduction in tax credits would enable the state to make up for any revenue shortfall it would encounter via the forgone corporate tax revenue and provide a more permanent, and more fair, incentive for businesses to relocate here.

Illinois is in an unenviable situation. Illinois officials’ handling of that situation serves as a reminder that tax increases are not a cure-all for a state’s budget woes. Missouri officials have an opportunity to head in the opposite direction from its neighbor; however, will Missouri legislators embrace a new direction (tax rate cuts), or continue with the status quo?

Legislators can rename their new tax credit programs if they want, but it is utterly absurd to suggest that a “tax rebate” for data centers — as it has been portrayed and presented in the Missouri House of Representatives — or a tax credit for sports events is anything other than business as usual in the Capitol. State officials are picking yet another set of presumably hot new industries on which to bet their development roulette chips. Giving special tax breaks to special interests is the history of Missouri development policy over the last few decades. Every year or two, a new flight of special big ideas is enshrined in the law, with a new round of fresh special interests ensconced in the state’s pantheon of practically untouchable tax credits. The Missouri Department of Economic Development’s own tax credit documents outline the timeline of Missouri’s nearly imperishable tax credit growth with exquisite clarity. (Click the image to enlarge.)

Lobbyist detente on tax credits is not a sustainable status quo, and continuing to carry old tax credits forward while instituting new ones is a failure of leadership. That state officials would try to re-brand a failed system and grow the development tax credit leviathan beyond its current confines is hugely disappointing. It is just more of the same, and Missourians deserve better than that.

Now that Missouri Gov. Jay Nixon has delivered his State of the State address, legislators in Jefferson City are prepared to tackle spending in their own way. The Missouri Legislature is considering a constitutional amendment that would cap state spending increases to the annual rise in the Consumer Price Index plus population growth. Any excess money would first go to paying down public debt, then a special reserve fund (not a bad idea considering some of the potential natural disasters this state faces), and then any remaining money would go towards temporarily reducing income taxes.

Along with the Hancock Amendment, this amendment would restrict the power of the legislature. Therefore, the legislature should be commended for proposing this amendment. Constitutional amendments like this, along with a balanced budget requirement (which Missouri has), give legislators an easy way to say ”no” to special interests.

Now, this is not a full-throated endorsement of the proposed amendment. There are a couple of things that bother me. First, there was an amendment that passed setting the cap at fiscal year 2008, the so-called “high water mark” of state revenues. Considering that the general revenue is expected to increase 3.9 percent  from $7.3 billion this year and that net general revenue for fiscal year 2008 was slightly more than $8 billion ($8,004,309, to be exact), the cap probably will not matter for . . . a while. Second, the spending limits will expire in five years unless lawmakers extend the time limit. So even if the voters approve the amendment, there is a distinct possibility that the cap can expire before it ever has the chance to restrict spending. Finally, the cap only applies to general revenue, which is where lawmakers have the most leeway in regards to spending, but it is not hard to imagine lawmakers putting down in statute specific spending items they want preserved and directing specific monies to funding them.

Despite my issues with the proposed amendment, the legislature should be commended for trying to push spending restrictions. However, it is unfortunate that such restrictions would have to be so watered down before it can pass.

Last night I was in Cape Girardeau, Mo., to talk tax credit issues. I noted that the Missouri Legislature could eliminate hundreds of millions of dollars’ worth of failing tax credit programs and basically wipe out the corporate income tax if it assigned the tax credit savings toward the tax’s elimination — shifting the state from a system where the government picks winners and losers in business to a system whereby all businesses benefit equally with a reduced or extinguished tax. (I have discussed this before.) Missouri’s tax credit problem is titanic, but its enormity also offers an opportunity to change the game when it comes to giving Missouri a competitive advantage in the national economy.

The good news? It seems the idea is picking up some steam with at least one Kansas City area legislator, who is considering a veritable tomahawk chop to some of the worst offending programs (via The Missouri Record):

[Sen. Will] Kraus’s bill would eliminate certain tax credits and apply the savings from the programs to lower the corporate income tax rate. Kraus said he hoped there would be enough additional revenue to get rid of the corporate income tax all together.

“This would make Missouri a much more business friendly place for businesses to come. It eliminates the picking of winners and losers by different tax credits,” Kraus said.

The measure would lower the low-income housing and historic preservation tax credits to 25 percent of their current value by 2016. The low-income housing credit costs the state $60 million a year, while the historic preservation costs $140 million.

The legislative session just began, so certainly a lot can change in the next few months that may temper my optimism. But in terms of policy, it is satisfying to see that the right, liberty, and free-market ideas are moving to the forefront of the state’s agenda. The state must realign its economic development program to reflect that in practically every circumstance, the best allocators of capital in the market are the participants in the market themselves.

As my colleague Michael Rathbone noted, there are only three states in the country that do not have a corporate income tax or a gross receipts tax, and none of them border Missouri. It would be a great way to get a leg up on our regional competition by telling businesses that Missouri is not only business-friendly, but that its tax laws are simple, predictable, and unencumbering. It also means that the unseen cost of the corporate income tax — higher consumer prices that compensate for the taxes that companies pay — would disappear, lowering costs of Missouri goods and making Missouri corporations more competitive.

It would be the right thing for Missouri, and I hope Missourians give the idea serious thought.

Last night, Missouri Gov. Jay Nixon delivered his annual State of the State address. The speech — part pep talk, part agenda setter — was nothing if not optimistic, which is good as far as that goes. Like New Year’s resolutions, SOTS addresses are meant to give at least a little hope to anyone paying attention that this legislative year will be better than the last. But just like New Year’s resolutions, big reforms, whether legislative or personal, too often turn out to be major failures without follow-through and personal sacrifice.

So with this hope, skepticism. It remains to be seen whether the governor will risk much political capital for the agenda he has outlined, particularly if his ideas are greeted with opposition in the Missouri General Assembly. And the governor appeared to concede as much last night when he talked about tax credits.

While we’re talking about government efficiency, let me make a related point. For the past three years, I have called for comprehensive tax credit reform. Some of you in this room stood with me on this issue. Others did not.

The consequences of this inaction are clear. Over the past four years, more than $2 billion in state tax credits have been redeemed. Effective tax credits are used to create jobs and grow our economy. But tax credits that aren’t delivering for Missourians must be retooled and reformed. We all know that dollars spent on tax credits are dollars we cannot invest in other critical priorities.

Once again, I ask you to pass comprehensive tax credit reform to get this spending under control.

One hundred and twenty three — that is how many words of the governor’s 5,814-word speech were devoted to the state’s budgetary equivalent of a billion dollar bunker buster. It is good that the governor even talked about tax credits, but the subject constituted just 2 percent of a speech that often detailed how the state is tightening its belt. That such a tiny amount of time was spent on highlighting such a huge problem is baffling and disappointing. But more frustrating, the content of those 123 words revealed nothing new, nor did they suggest any greater commitment to “getting it done” when it comes to tax credit reform. Says the governor, just do it. Or, you know, not.

That is despite the fact that ideas are bursting out from across the ideological spectrum on how to combat the tax credit problem. But whether the idea is blocking tax credit issuances (that is, the distribution of tax credits) or even going as far as the desperate step of unilaterally blocking tax credit redemptions altogether — as the left-leaning St. Louis Post-Dispatch suggests — there is growing interest to get a tax credit system that has spun out of control back in line so that our constitutionally-mandated priorities remain in order.

It is concerning that in the same speech where the governor paid brief homage to tax credit reform, he simultaneously, and at length, talked about new industry-targeted incentives under his “Missouri Works” program. Unless an appetite for legitimate reform develops in Jefferson City, Missourians are looking at not only “same old, same old” in the Capitol, but much “more of the same,” as the tax credit fiefdoms that have developed in the last decade fight off legislative incursions and new duchies get created for the next “big idea(s),” Aerotropolis included. (Yes, legislators may try to resurrect it.)

If state officials cannot get serious about a budgetary problem measurable not only in millions, but in billions of dollars, I am not sure they can get serious about much of anything. Gov. Nixon struck the right optimistic tone, as is required of these events, but when it came to the substance, the speech last night was woefully lacking. The state of the state could be worse, but if the governor’s speech is any indicator, Missourians should not expect it to get much better anytime soon.

The St. Louis Post-Dispatch editorial board is urging Missouri Gov. Jay Nixon (D) to stall the awarding of state tax credits. Why? Missouri is facing an estimated budget shortfall of $500 million, a number very close to annual state tax credit awards. As the Post editorial points out, tax credits for corporate welfare have grown unabated while funding for schools has been cut.

Tax credit reform is difficult. We saw that during the last legislative session, and during the Tax Credit Review Commission’s hearings (beneficiaries of state tax credits tend to fight hard to keep their credits). And those interested in benefiting from a new tax credit program seem to fight almost even harder to establish a new program.

Perhaps more difficult for politicians is the fact that tax credit reform does not cut cleanly along party lines. Some Republican legislators strongly support tax credit reform, while others oppose it — just as some Democrat legislators strongly support reform, while others oppose it (or even advocate for the creation of new programs).

I disagree with the Post’s rosy optimism that Nixon will act responsibly. Our governor has a history of waffling on tax credit reform, something my colleagues at the Show-Me Institute have documented repeatedly. He also seemingly likes to travel to announce the “creation” of jobs under questionable state tax incentive programs. Personally, I would pin tax credit reform hopes on legislators.

Did you know a single committee might have the power to vote to halt some tax credit programs this year?

According to state law, “…no new tax credits, except the senior citizens property tax credit…shall be issued or certified…unless the estimate of such credits have been reviewed and approved by a majority of the senate appropriations committee and house budget committee.”

If a majority of either the Missouri House or Senate committees referenced vote to not approve one or more of the more egregious tax credit program estimates (and there are several), then perhaps no money would be issued for those programs this year.  Under this scenario, the daunting challenge of convincing many legislators who may have constituents and contributors who benefit greatly from tax credit programs seems to be reduced.

It is time for legislators to put the needs of Missouri taxpayers ahead of their own political concerns. Concerns about party politics should not dictate the budget solutions pursued in 2012.

The state is facing a budget shortfall of hundreds of millions — perhaps approximately $500 million. Defunding a few of the more wasteful tax credit programs could certainly help address that. And it may be easier to do than some may think.

Last week, I highlighted one good-intentioned but misconceived proposal that a Missouri legislator suggested to get the state’s economy moving. This week, there is a proposal that may have a kernel of a good idea in it, though the implementation leaves something to be desired.

State Sen. John Lamping, R-Ladue, has followed through with his plan to file a bill that eliminates state income taxes on the first $2,000 in individual income and replaces the money by hiking the state’s cigarette tax — now among the nation’s lowest.

Lamping says the bill is revenue neutral.

Under his proposal, SB 638, no Missourian would pay taxes on the first $2,000 of earned income. Now, state income tax is levied on all income, no matter how small. That cut would cost the state $128 million a year.

As David Stokes noted Thursday, non-smokers and infrequent smokers would be net beneficiaries if the legislation is implemented. The problem is, who would not be a net beneficiary? Smokers tend to be poorer than non-smokers, and any hike in the cigarette tax will tend to hit those living in poverty fairly hard. In 2009, the CDC found that “[t]he prevalence of current smoking was higher among adults living below the federal poverty level (31.1%) than among those at or above this level (19.4%).” Will there be a deterrent effect if there is a marginal increase of 26 cents in the cigarette tax? Possibly, but it also is fairly likely that what the poor gain from the income tax reduction could get eviscerated by the cigarette tax hike. If income taxes were exempted at a higher level, a “worse off” scenario for poor smokers would be less likely.

But there is an alternative to a straight cigarette tax hike if legislators really want to exempt income from the individual income tax. I wrote last week that major reductions to the corporate income tax could be made with the elimination of millions of dollars in failing tax credits. There also is ample room for a deeper cut to the individual income tax that would increase the likelihood that the poor would be net beneficiaries in a tax system rebalancing. Aside from the drastic hikes in the cigarette tax that have been proposed elsewhere, which would exacerbate the problem for the poor, a reduction in tax credits could account for much of the revenue required to make major cuts to the individual income tax.

Put more succinctly, to reduce income taxes, other taxes do not necessarily have to go up if state tax credits go down to a more manageable and appropriate level. Instead of picking winners and losers, let everyone benefit. It would make for a better Missouri and a better-balanced tax system.