Missouri deserves a creative program for supporting businesses, reducing unemployment
Lawmakers should support businesses that employ Missourians in need of a job by augmenting the time-tested federal Work Opportunity Tax Credit with a state-level credit (Getty Images).
Early last month, Gov. Mike Parson signed legislation to lower the state’s income tax rate at an annual cost of more than $500 million — shorting Missouri taxpayers out of a greater return for their money.
Tax dollars that could have staffed up school districts facing teacher and staff shortages, improved facilities and equipment for first responders and numerous other services in need of optimization and rightfully supported by state government were instead spent on tax cuts that largely benefit the wealthy.
When questioned by St. Louis Public Radio about the tax cut only helping Missourians with relatively higher incomes, the governor responded, “I’m very confident that if we give that money back to those people … they’re gonna invest it right back in the economy.”
However, there is no guarantee the dollars no longer collected through Missouri’s income tax will trickle down into Missouri’s economy.
With the midterm elections behind us, lawmakers should aim higher and seek imaginative approaches to stubborn challenges, such as supporting businesses that employ Missourians in need of a job by augmenting the time-tested federal Work Opportunity Tax Credit (WOTC) with a state-level credit.
WOTC, first enacted in 1996, lowers the cost to employers of hiring individuals who are struggling to find employment, including veterans, people with disabilities, the long-term unemployed, those on state financial assistance, and people who have completed terms of incarceration. The National Conference of State Legislatures has found taxpayers benefit at twice the cost of the maximum tax credit issued.
Over the last 26 years, WOTC has increased employment among eligible groups by 12.6% and wages for qualifying veterans by 39.9%. At a time when businesses are struggling to fill job openings, a program like WOTC benefits not only employers and employees but everyday consumers experiencing the consequences of a tight labor market.
Based on 2021’s WOTC certifications received, a 50% additional credit would cost Missouri an estimated $46,388,400 annually (assuming an average federal credit of $2,600 per certification) and could be easily added on to the state’s existing online WOTC portal, which processes applications for the federal credit.
Another state has already led the way on this idea.
On April 1, Republican Gov. Larry Hogan of Maryland signed a bipartisan bill creating a state income tax credit for up to 50% of the federal WOTC claimed by an employer for wages paid or incurred for a qualified individual employed in the state. Throughout the Maryland credit’s 10-year life, a net benefit is expected by lowering the demand and expense of state safety net programs.
Missouri taxpayers could reasonably expect a comparable outcome.
Great ideas are out there and if you don’t have one of your own, start with someone else’s.
Missouri deserves creative and fiscally responsible approaches to its challenges, rather than blunt tax cuts with benefits that can trickle right out of our state.
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