So where can Missouri go from here, not only to achieve its pre-Great Recession status, but invest in its residents and provide the foundation for economic prosperity?
Three common sense policy changes would go a long way towards addressing challenges facing Missouri families and make Missouri more competitive in the future.
Create a State Earned Income Tax Credit: Boost Local Economies and Improve Outcomes for Families
A Missouri EITC would bolster the pay of hard-working families, allowing them to better make ends meet and pay for necessities like car repairs, child care, or even a class. And families are spending this money in their local communities, boosting the Missouri economy at the same time.
More than 500,000 Missouri families could potentially benefit from a state EITC, depending on the structure. Click here to learn more about a state EITC.
Enact the Streamlined Sales Tax to Strengthen State Services & Level the Playing Field for MO Retailers
Missouri tax laws have failed to keep pace with a changing economy, reducing the state’s ability to invest in the well-being of its citizens. By enacting the streamlined sales tax mechanism, Missouri can level the playing field for local bricks-and-mortar businesses that are currently at a competitive disadvantage relative to online businesses because of a loophole in how sales taxes are currently collected.
This measure allows the states to simplify their sales tax laws to make it easier for online retailers to collect and remit state and local sales and use tax. Based on the experience of other states, Missouri could expect to capture between $15-$20 million in currently uncollected state sales taxes in the first full year of implementation. In addition, the U.S. Congress is considering companion legislation that would require retailers to fully comply with the state legislation. At that time, Missouri would likely capture hundreds of millions per year in currently uncollected state and local sales tax revenue.
Expand Medicaid Eligibility: Improve the Health of Missourians and Save Money for the State
Expanding Medicaid would provide essential health care coverage for hundreds of thousands of Missourians, while actually saving the state funds that can be used for other purposes. By moving people from existing state-funded services into the federally-funded Medicaid expansion, Missouri could net savings of at least $100 million per year in state general revenue dollars when the expansion is fully implemented. That amount is net of new state general revenue costs for the expanded coverage. These are real dollars that would be saved in the state’s budget and which could be used to increase funding for education or other services.
Many states have already realized these savings. A recent analysis commissioned by the Robert Wood Johnson Foundation examined actual state budget savings in eight states that have expanded Medicaid including Arkansas, Colorado, Kentucky, Michigan, New Mexico, Oregon, Washington and West Virginia. The report found that by the end of 2015 (just 1.5 years into expansion) these eight states would have experienced savings and revenue increases of more than $1.8 billion.