The Buzz

December 9, 2013

As Missouri and Kansas eye Boeing, bigger choices are coming

While Kansas and Missouri assemble incentives to lure a Boeing Co. aircraft plant to the Midwest, Kansas City’s corporate and political communities are preparing for a more important debate: the 2014 legislative donnybrook over incentives, tax breaks, and subsidies for scores of other businesses and business owners in the region.

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Perhaps we can forgive Kansas City’s political and business elites for their polite yawns as Missouri and Kansas assemble incentive packages for a new Boeing airplane plant.

They’ve been down this runway before. Five years ago, Kansas City made a significant play for a Bombardier assembly plant, only to lose to Canada. More than two decades ago, the area pondered big-time incentives to lure a McDonnell Douglas assembly plant here. It was never built.

So Kansas City has some experience in the aircraft-production-bridesmaid business. And we presumably will be ready to offer a condolence brew to St. Louis or Wichita if they lose the Boeing facility. Let’s face it, it’s most likely that the company stays in Seattle and uses the other bids to extract concessions from Washington state officials and workers.

Besides, Kansas City’s corporate and political communities are preparing for a far more important debate: the 2014 legislative donnybrook over incentives, tax breaks and subsidies for scores of other businesses.

In their next session, Missouri lawmakers almost certainly will debate another package of corporate tax cuts designed to compete with the cuts Kansas enacted in 2012. Kansas, you’ll recall, eliminated business income taxes for almost all small enterprises.

If Missouri legislators pass new business tax cuts — and if Kansas lawmakers respond with new reductions of their own — the impact on the Kansas City region would be enormous. The economic Border War isn’t just about well-known businesses moving back and forth across the state line, after all. It’s about thousands of accountants, lawyers, and consultants facing a similar choice.

And those decisions are almost uniquely centered on the Kansas City area. A small-business owner in Chillicothe is unlikely to move to Salina for lower taxes, for example, but a Jackson County entrepreneur might relocate to Johnson County for a tax break.

Which means the two states’ overall business tax environments eventually will be far more important to Kansas City than public incentives for big-ticket employers like Boeing or Ford.

At the same time, though, tax cuts probably will mean less money for education, infrastructure and other public goods. That’s one reason some Kansas City business elites supported Gov. Jay Nixon’s veto of Missouri’s 2013 tax-cut bill.

In a slow news month, the Boeing special session grabs our attention, but the most significant fight for Kansas City begins in January when the gavels come down.

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