The debate about tax structure is not some egghead, ivory-tower issue, and Missouri is about to find this out firsthand. Last year, Kansas eliminated its tax on the pass-through income of LLCs, S-Corporations, and sole proprietorships, and the state is looking to cut income taxes further this year. Kansas Gov. Sam Brownback’s explicit objective: to get rid of Kansas income taxes.
Missouri and Kansas have been engaged in an economic border war for years, firing salvos of “targeted” tax incentives in hopes of alluring each other’s companies with special breaks. That phase of the war is clearly ending. Yet, as Kansas builds up its pro-growth arsenal through massive tax reforms, Missouri development officials seem to think that Missouri businesses will read the “fine print” of Kansas’ reforms and rethink moving there. That is not a viable plan.
Tax structure matters. Missouri should not sit idly by as Kansas raids its border economy with the lure of broad and deep tax relief. Missouri must respond substantively and in kind. This border war will eventually end. The question is, will it be on terms of Missouri’s choosing, or Kansas’?