This article first appeared in the St. Louis Beacon, Jan. 1, 2011 - Year end is a time to reflect — and to think ahead. In the holiday spirit, the Show-Me Institute has compiled five New Year's resolutions for state officials, to promote better government for 2011 and beyond. Taken together, these policy changes have the potential to propel Missouri's income and job growth into the front ranks.
First, lose weight. The Nov. 2 election showed that the overwhelming majority of Missourians (and Americans generally) want smaller, less intrusive government and reduced taxes. Missouri legislators should therefore unite to kill pork barrel spending projects and make major spending cuts.
Municipalities need to rein in runaway pension costs for city employees, including firefighters and police. They should also consider privatizing the provision of water, electrical power and other services. The Show-Me Institute has produced a wealth of research demonstrating the benefits of privatization, which creates much-needed cash through the sale of public-owned assets and contributes to municipal revenues through the addition of new taxpaying entities in the private sector. Research shows that privately owned utilities consistently provide more efficient services than their public-sector counterparts.
Second, stop meddling in other people's business. The Show-Me Institute has spotlighted the proliferation of needless licensing requirements that do nothing to promote public safety in businesses as different as home heating and air conditioning work and African hair-braiding. Such requirements are often promoted by established businesses as a means of inhibiting competition and choice.
Third, give families real school choice. Our research has consistently shown that education is improved when parents and students are given more choices and traditional public schools face greater competition from charter and virtual schools. Adjusted for inflation, we spend four times as much for education in urban areas today as in 1960, but educational achievement is no higher.
Today, the St. Louis and Kansas City school districts spend more than $15,000 a pupil -- more than all but the most expensive private schools. Charter schools provide a real opportunity for poor students stuck in failing schools. They also enable teachers and administrators to innovate more freely and force other public schools to improve their performance in order to compete successfully.
Fourth, halt the silly business of awarding specialized tax credits to favored enterprises. I have pointed out that government policy should not prefer filmmaking over, say, hog farming, "simply because one is considered to be more glamorous." Most of the local jobs created by Missouri film productions like "Up In the Air" were both low-wage and temporary -- many lasting only a single day. Missouri should do away with its development tax credit programs, which have a record of failing to boost either income or employment -- even if you do like George Clooney.
Last but not least, repeal the state income tax and replace it with a broader sales tax. The adoption of such a plan in 2011 would be the single most important step that Missouri could take to move Missouri to the front of the pack in terms of growth. Noted economist Arthur Laffer, who spoke at the Show-Me Institute in October, observed that during the past decade, the nine states without a personal income tax have "outperformed those states with the highest personal income tax rates by 26.5 percent, and have outperformed the U.S. average by 20 percent."
Even more impressive, those nine states "outperformed Missouri by a whopping 41.5 percent." Eliminating the income tax would encourage people to work and save more, crucial factors for economic growth. A broader sales tax can also be balanced with mechanisms that would compensate those with lower incomes for any potentially regressive effects.
In the past, it has often seemed that major changes originate on the coasts and slowly make their way to the heartland. I think that flow has been reversed during the past year and a half. I believe that Missouri -- and the heartland -- will play a leading role in our nation's economic recovery. We will do so through a renewed commitment to free enterprise.
Christine Harbin is a policy analyst for the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.