Tax incentives to lure jobs across Missouri-Kansas border criticized

Thursday, January 24, 2013 | 7:34 p.m. CST

JEFFERSON CITY — A group that wants states to stop poaching businesses from each other pointed Thursday to the incentive battle between Kansas and Missouri as a prime example of how states are squandering taxpayer dollars in the name of job creation.

A report released by Good Jobs First, a Washington, D.C.-based nonprofit, recommends that states quit actively recruiting businesses to relocate from other states and stop offering incentives for them to shift existing jobs across state lines.

Greg LeRoy, the executive director of Good Jobs First, said numerous states are engaging in "interstate job fraud" with taxpayer dollars.

"They actively try to lure existing jobs from other states, re-label them 'new' — or perhaps technically new to the state — and shower footloose companies with eight- and nine-figure subsidy packages," LeRoy said.

The report says some businesses also practice "job blackmail" by threatening to leave a state unless they get incentives to remain.

The net result of the tax breaks for particular businesses is that governments have less money available for education, infrastructure and other services that could benefit all employers, the report says.

Some states, such as Texas, Rhode Island and Tennessee, are devoting substantial amounts to business incentives, the report said. The competition is especially intense in some metropolitan areas such as Kansas City that encompass multiple states.

Bill Hall, the assistant to the chairman of Kansas City-based Hallmark Cards Inc., said research conducted by his company shows that Kansas has recently provided $132 million in tax breaks to companies employing 3,109 people to move from Kansas City's home of Jackson County, Mo., to two Kansas counties just across the state line. Missouri, meanwhile, has provided about $60 million in tax breaks to entice 2,514 jobs to relocate from Kansas to the Missouri side of the metropolitan area, he said.

The net gain to Kansas was 595 jobs at cost of $323,000 per job, Hall said.

"Both states are losing the economic border war by wasting incentives on poaching existing jobs across the state line, and the real loser in this is the taxpayer," Hall said on a conference call hosted by Good Jobs First.

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