The Buzz

The Show Me debate, continued

Updated: 2013-09-10T15:56:08Z

By DAVE HELLING

Patrick Ishmael at the Show-Me Institute has emerged from the fire swamp to respond to our arguments about his analysis of tax policy and migration patterns in Missouri and Kansas.

Click here to read it.

I won’t extend the argument too much, except to point out: Patrick’s new post is about the migratory impact of the earnings tax. And a good discussion can be had on the influence of that local tax on living decisions in the Kansas City and St. Louis areas.

But his original post wasn’t about the earnings tax, which is never mentioned. It was about HB 253, which is statewide legislation.

And as I wrote, the evidence is weak that statewide tax policy has a major influence on localized living choices. Schools, housing stock, quality of life, even the weather appear to be bigger influences on those choices than statewide taxes, at least so far, in our area.

Missourians who are moving are moving to other places in Missouri.

Moreover: Even if you could establish a firm link between statewide tax policy and out-migration, it would raise serious equity issues rather quickly.

Should Missouri tax policy be changed to encourage more people to stay in Kansas City? That hardly seems fair or relevant to the people in Chillicothe, Columbia, Sedalia, or any number of communities who don’t face the border-city migration problem Kansas City and St. Louis do.

And the same analysis will apply to Kansas.

As Patrick and others have pointed out in the argument over HB 253, there is some early evidence (much of it anecdotal) that some businesses are moving from Missouri to Kansas because of tax cuts there.

That may be good news for Johnson County, Kan. But statewide tax cuts will almost certainly mean less money for schools and public services in Salina and Russell and Great Bend, Kan., cities that don’t benefit from migration into Johnson County.

(Remember: a sizable in-migration will help local communities, but not the state, since the state cut its taxes to lure the businesses across the state line. The net statewide revenue effect is likely close to zero, at least in the short term — indeed, total Kansas tax revenues were actually down more than 9 percent in August, compared with the previous August.

Someone in Kansas must absorb that shortfall, but if Patrick is right, it won’t be Johnson County.)

Which is why, finally, statewide employment numbers are significant. Businesses and jobs may indeed move from Jackson County, Mo. to Johnson County, but the price may be a dip in employment and services in central and western Kansas.

And so far, the Kansas unemployment rate remains as flat as, well, Kansas.

So let’s argue about local taxes (earnings, property, sales, all of it) and local spending as they relate to living decisions. And, as I’ve also written, we should argue about general tax fairness for individual Missourians, an argument to be settled this week.

But statewide tax policy for businesses — the key part of HB 253 — seems a much more difficult lift, at least on the evidence we have now.

Have fun storming the castle, Patrick.

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