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31 August 2011

Ridgeway: Special Session Called: Tax Credit Performance Review

In past writings and speeches I have referred to myself as a recovering tax credit addict. The description is still accurate today. Missouri has over sixty different tax credit programs that represent a large portion of our state budget although it does not show up as a line item anywhere.

As a fiscal conservative, I originally found the concept of tax credits extremely appealing. After all, how could keeping money out of the hands of government and putting it in the hands of private citizens not be a win-win situation? As it turns out, not only are we still picking winners and losers through the legislative process, but in some cases we are getting a terrible return on the taxpayers’ money.

The original concept of tax credits was to divert money that would normally come into the state to private entities or individuals who would use it as seed money to create jobs. Like anything conceived in the halls of government, the idea morphed into a wide range of projects, some of which did nothing to create jobs and cost more than they returned.

Now we are on the verge of convening in a Special Session to address the ongoing issue of tax credits again. The basic idea is to eliminate or reduce some credits that are not providing a reasonable return and implement or amend programs that will. My personal belief is that government needs to get out of the business of picking winners and losers and return to a level playing field where market forces and consumers make such decisions. As we undertake this process, we need to remember government’s track record for creating jobs, especially when we look at tax credits associated with a land assemblage project in St. Louis.

Passed in 2007, the legislation allowed for tax credits to be issued essentially for one developer to purchase land for the purpose of development. While the cost of the land did not qualify for tax credits, the interest, maintenance, and taxes did. To date, the project has not taken off although the taxpayers of our state are on the hook for in excess of $25 million. Paying interest and taxes do not create jobs. Directing such a significant amount of resources to one project is risky and has not provided a substantive return, if any at all.

The governor has set September 6th, 2011, as the first day of special session. We need to stay focused on what most of us promised when originally running for office: getting the most value for the taxpayers’ dollars while emphasizing free enterprise rather than expanded government. Nothing less will do.

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