*An earlier version of this commentary was attributed to the wrong newspaper.
Missouri is racing to keep up with Kansas — but the direction may be down instead.
Senate Bill 26, which would reduce individual and business income taxes while raising some state sales taxes, is an ill-devised plan to get businesses to stay in or come to Missouri, which shares its border with Kansas — a state that has tried the same method with little visible success.
Sponsored by Sen. Will Kraus, R-Lee's Summit, this bill has a good chance of making it through the Senate, where it passed on its third reading Tuesday. If that happens, it is likely to fly through the even more conservative House.
That should not happen. Our local legislators should know how dangerous this bill is and what it could do to the quality of life in economically flourishing southwest Missouri. That, in turn, would hurt business — and citizens.
While tax reform is a worthy effort, SB 26 is not. It will cost the state between $450 million and $700 million a year by the end of the decade, even with income generated through increased sales taxes.
Funds to local governments, schools, human services, even infrastructure will have to be cut to accommodate that deficit, which is exactly what Kansas is facing with projected revenue more than $700 million short of budgeted expenditures after passing a similar law last year.
The goal behind it all is to spur job growth and expand the tax base — a worthy goal, indeed. But there is scant evidence that the move will accomplish that. The Center on Budget and Policy Priorities has studied this concept and concluded that cutting taxes does not help small businesses create jobs but does hurt state economies.
How can this be? A study by the U.S. Small Business Administration in 2012 found that states with high income tax rates created just as many small businesses as other states. In fact, the main draw is the location of other businesses in the same industry.
But, even if a reduced income tax rate did influence a business to locate in Missouri, only 2.7 percent of all personal income taxpayers are genuine small businesses that have any employees, and the number of employees is driven by demand for the company's products or services, not taxes paid.
If we want more businesses and more jobs in southwest Missouri, we need a viable state and local government that is sufficiently supported. We need infrastructure and schools that can produce trained workers as well as consumers.
We don't need a new income tax structure that would cost the state as much as $1 billion. We need an income tax structure that is more equitable and adequately supports the programs and services we need to compete economically and socially.
Copyright Springfield News-Leader. Reprinted with permission.