Respected business and civic leaders in the Kansas City area get it: Companies that scoot across the state line to snare lucrative tax breaks leave behind a bigger tax burden for others.
“Those of us who don’t move are paying for those who do,” said Bill Hall, president of the Hall Family Foundation.
That costly and irritating fact gets to the heart of the problem as Kansas and Missouri officials engage in the financially destructive race to hand out taxpayer subsidies.
Those “who don’t move” include hundreds of thousands of residents and thousands of business leaders who must pay the taxes required to do public good — by providing high quality schools, social services and fire and police coverage — that those selected for special public subsidies won’t be supporting.
Millions upon millions of tax dollars are being wasted this way, and for what? The back-and-forth activity has created almost no new net job growth for the area.
A review of job growth in the Kansas City region and 17 others, including 10 that are considered Midwestern benchmarks for this area, shows our region falling behind. It was an abysmal 16th in percentage growth in total nonfarm employment from July 2009 to July 2012, or roughly the time that the amped-up economic battle has been occurring. Growth was only one half of 1 percent.
Yet the dueling goes on and on.
SelectQuote Senior Insurance Services last week announced a planned several-block move of 150 workers from Kansas City to Leawood, Kan. The company could get to keep up to 95 percent of its employees’ state income taxes for up to seven years, depriving the state of that money. Health Outcomes Sciences said a few days ago it is seeking similar income tax subsidies to move 13 workers from Kansas City to Overland Park.
Hall, a tenacious follower of this ongoing debacle, estimates that Kansas has decided to forgive $131 million in state income taxes since 2009 because of the border war, while Missouri is forgiving $60 million in income taxes. Kansas is giving up more than $250,000 in income taxes for each additional employee it has gained from Missouri.
That’s simply unconscionable.
Unfortunately, neither Kansas Gov. Sam Brownback nor Missouri Gov. Jay Nixon has shown the leadership needed to help the metropolitan area deal with this problem. Both ignored a 2011 letter signed by 17 top metro area executives calling for a ceasefire.
Steps have to occur to change the situation. Both states should give no — or reduced — incentives to companies that relocate across the state line. Both states should reduce subsidies for development in green fields.
Kansas City area business leaders must keep up the pressure on state legislators to ratchet back subsidies that are doing little to build regional employment. It’s time to make everyone pay a fairer share of taxes.
Copyright The Kansas City Star. Reprinted with permission.