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On Tax Credits and Economic Development, or: What SB 1234 Does Poorly

April 10th, 2008 by mopns · No Comments

By Joseph Haslag

Senate Bill 1234 is currently rolling through the Senate. It expands the enterprise enhancement zone, and by identifying “megaprojects” that consist of capital investment of at least $300 million over an eight-year span, it is intended to create more than 1,000 jobs that pay higher-than-county-average wages. Under the new law, megaprojects would receive tax credits applied to the project’s wage bill over 22 years. Proponents tout the bill as a tool to spur
economic development.

In a March 25 article, the Kansas City Star reported that Bombardier Aerospace is considering land near Kansas City International Airport for a possible $375 million aircraft assembly plant that would eventually employ 2,100 people. According to Missouri’s Department of Economic Development (DED), up to 5,200 additional related jobs would be attracted. (More on the DED estimate of spillover jobs later.)

These two events are related. Bombardier’s qualification as a mega-project would make it eligible for a tax credit applied to its workers’ wages for the next 22 years — not exceeding 80 percent of the wages for the first three years and up to 25 percent for years nine through 22 after the project is initiated.

Bombardier Aerospace is a welcome addition to Missouri. But because tax credits — reductions to taxes collected by the Department of Revenue — are involved, it is worth asking two questions: Is this a good deal for Missouri taxpayers? Is this the best deal for Missouri taxpayers? Read more…

Joseph Haslag is a professor in the Economics Department at the University ofMissouri-Columbia, and executive vice president of the Show-Me Institute.

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Tags: Kansas City · MO Legislature · Show Me Institute

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  • 1 Jackson // Apr 11, 2008 at 3:28 pm

    I hope Haslag has tenure otherwise his @$$ is grass going against the “biggest” economic development in the history of the state.

    How dare Haslag point out any shortcomings of such a great deal!

    How dare Senators ask hard questions about the deal!

    How dare indeed!

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