Institute of Public Policy: AssessiŶg the IŵpaĐt of Missouri’s Tadž Credits 1 Policy Research Brief October 2012 AssessiŶg the Iŵpact of Missouri’s Tax Credits Submission to the Missouri Tax Credit Review Commission Brian Dabson, Thomas G. Johnson, Andrew Wesemann, Maria Figueroa-Armijos, and Judith I. Stallmann Introduction In November 2010, the Missouri Tax Credit Review Commission submitted its report to Governor Nixon. The CoŵŵissioŶ had ďeeŶ Đharged ǁith the task of deterŵiŶiŶg ǁhiĐh tadž prograŵs were generating a good return on investment for the taxpayers of Missouri and which were not, and to provide fact-based reĐoŵŵeŶdatioŶs for iŵproǀeŵeŶt to eŶsure that the “tate’s tadž Đredit prograŵs are aĐtuallLJ ĐreatiŶg jobs, spurring economic development aŶd ďuildiŶg ĐoŵŵuŶities (MTCRC, 2010, p. 5). The Commission made a number of general and specific recommendations, the most significant being: To eliminate or not reauthorize 28 tax credit programs that have outlived their usefulness or do not create a justifiable benefit in relation to their cost to taxpayers. To improve the efficiency of 30 tax credit programs so as to provide a greater return on investment for taxpayers. To subject tax credit programs to review by the General Assembly according to an orderly sunset schedule, rather than to an annual appropriation process. To impose, where appropriate and feasible, an annual cap on all programs that currently lack a statutory cap to limit the total amount of tax credits that may be authorized annually so as to gain additional budget certainty for the state. To make changes to state and federal law in order to improve the efficiency and overall value of Missouri’s tadž Đredit prograŵs to ďoth the “tate aŶd the users of the prograŵs. To develop a voluntary buy-back or exchange of outstanding tax credits for less than their face ǀalue iŶ order to reduĐe the “tate’s oǀerall tadž Đredit liaďilitLJ. The estimated impact of these recommendations if adopted was a total savings of $220 million in tax credit authorizations, the elimination of the exponential growth of authorizations, and the improvement of budget forecasting. For a variety of reasons, these recommendations failed to attract the support of legislators and were not adopted. In the meantime, as shown in Figure 1, the value of tax credit redemptions continued to increase so that in Fiscal Year 2012 they amounted to $629.5 million.