Readers: Missouri Shouldn’t Lower Cap On Historic Tax Credits
In July of this year Gov Nixon created the Missouri Tax Credit Review Commission, co-chaired by Steve Stogel & Senator Chuck Gross, to review the various state tax credit programs, including the successful historic preservation tax credit. Â From the detailed historic preservation subcommittee report:
“A well-thought-out and skillfully drafted tax incentive for historic preservation cannot achieve its objectives if the total amount of credits that can be awarded annually is subject to a statutory limit, particularly if the limit is fixed at a low figure…
…Where demand for credits exceeds the amount permitted by law, applicants either must compete for credits or participate in a lottery or other arbitrary allocation system. Projects that truly require the state credit to be financially feasible have tended to be discouraged from participating because of the lack of certainty as to the outcome, the cost of preparing a competitive application that nonetheless may be unsuccessful, and the difficulties of keeping financing commitments in place during the evaluation process.”
Still it is possible Missouri will lower the cap on our historic preservation tax credit, thus prompting my poll question & post last week:
Q: Missouri is considering lowering the cap on the Historic Rehab Tax Credit from $140 mil to $75 mil. Reaction?Bad idea, this credit pays for itself 75 70.75%
- Bad idea, this credit pays for itself 75 [70.75%]
- Good idea to lower the limit 11 [10.38%]
- I’d set the cap even lower 6 [5.66%]
- Other answer… 6 [5.66%]
- We should eliminate this tax credit entirely. 4 [3.77%]
- Unsure/no opinion 4 [3.77%]
The six “other” answers were:
- Fight for $100 million in order to be realistic about state of politics
- The cuts have to come from somewhere.
- There are probably other tax credits that should be lowered before this one.
- I’m not happy, but I realize we are in the middle of a recession
- sacrifices have to be made to have a balanced budget
- Good idea if and only if savings are put towards job creation tax credits
No surprise that over 70% of the readership wants the state to not lower the cap.
In November 2008 nearly 85% of St. Louis voters supported Democrat Jay Nixon for Governor. Â Statewide Nixon received just over 58% of the vote, showing how much St. Louis voters support Democrats. Â Will Gov Nixon listen to the people of St. Louis, or does he know we always vote for the Democrat regardless?
St. Louis and communities across the state need the historic tax credit to put buildings back into use, creating jobs & revitalizing areas along the way.
– Steve Patterson
I'm not surprised by the results, given the readership of this blog, but it's no different than any other special-interest tax credit or expenditure – those with a vested interest view it as indispensible, while those who don't benefit it from it see it as a waste or “pork”. Given the current economic challenges, I would expect, at a minimum, to see the cap reduced, and, potentially to see it be left unfunded for a year or two, or eliminated completely.
Bigger picture, the fundamental discussion will likely build on the definition of “fairness”. Any time you have a tax or credit that's not available to everyone, or even the majority of taxpayers, you run the risk of the fairness issue being raised. Taxes are all about redistributing wealth, otherwise, we'd just pay for what we need, directly, as needed. Or, in the simplest terms, given that revenues are down, should other taxes be raised to maintain the present cap? Or, should the cap be reduced, so that other taxes do not need to be increased? My guess is that the latter argment will win out.
Yes to all the above. Yes, the overwhelming democratic leaning city will vote overwhelmingly for Nixon. His spending cuts no tax policy to balance the budget will ensure that who voted for him last time will vote for him again. Yes, Historic tax credits will take a hit. It won't be elliminated or suspended but the cap will be around $75 million as the commission was a political expediant way for Nixon and legislators to come up with a consensus for the start of the legislative session. JZ71 is right, one mans special interest is another mans pork. At some point the trough starts to go empty.
Finally. Yes, Nixon is a blue dog democrat for all intents and purposes and will not push or support for any tax revenue to relieve the state of its declining revenues. My favorite is how much ralied against health care cuts when he was AG and then turned around and did the same as the previous Governor, balance by cuts. Heck, he won't even state support for an online sales tax which hurts MO brick and morter stores more then anything. Even rural stores.