No More M.A.D. with Kansas

Missouri and Kansas have a long history of competition – and worse. In the 1860s, we fought in the Civil War. We used to compete in sports every year, until KU chickened out when Mizzou moved to the SEC. And, for the past decade, we’ve battled to lure jobs across the border by dangling so-called jobs tax credits.

In the past four years, Missouri and Kansas have collectively doled out $217 million in corporate subsidies to seduce Kansas City area businesses to shuffle jobs across state lines, but fail to add any new jobs to the region. In these years, Kansas has spent $141 million to entice the re-location of 3,433 jobs from Missouri, and Missouri has spent $76 million to lure 2,929 jobs from Kansas – for a net difference of 504 jobs at $430,000 per job. However large, these numbers still fail to take any “retention” tax credits into account to theoretically keep a company from moving jobs elsewhere.

Unfortunately, rather than create a long-term low tax climate for all entrepreneurs and families, these corporate subsidies only provide special benefits to the privileged few big enough to be aware of the benefits and savvy enough to work the system. Both states shuffle the cards around, hold celebratory gubernatorial press conferences, and pretend as if real economic growth is occurring.

In the era of a 24-hour news cycle, these perpetual press releases touting corporate subsidies create the appearance of success. These results prove that our economic development border war is not leading either state to prosperity. Instead of improving our economy, the border war paves a path of mutually assured destruction.

Both states give hard-earned taxpayer dollars to businesses to move just a few miles. Their employees probably never move. They don’t start shopping in new places. They don’t generate new economic activity for the region. The only change is the address from which they operate.

This is insane economic policy. And it illustrates the fundamental problem with our so-called jobs tax credits: they don’t actually create new jobs, especially when the subsidies are spent in competition with Kansas.

House Bill 1646, sponsored by Speaker Tim Jones (R-Eureka), directs the Governor and the Department of Economic Development to negotiate a corporate subsidy ceasefire with Kansas for the nine combined border counties in the Kansas City metro area. It tells Kansas that we’re willing to work for the greater benefit of the entire Kansas City region, but we’re not going to unilaterally disarm. If Kansas passes a similar law, we’ll call a truce.

This limited bill enjoys broad support in the legislature. As one who is skeptical of the entire corporate subsidy shell game, I’m hopeful that it’s the first of many steps to re-examine our economic development policy. Going forward, we should pursue an interstate compact with several other states to shift the focus away from specialized giveaways and back to lower taxes for everyone.