Missouri struggles to support public education. Year after year, lawmakers make choices about general revenue expenditures like those that support Missouri’s K-12 public schools. They also make decisions about tax credits, like Missouri’s Low Income Housing Tax Credit (LIHTC). Year after year, the Foundation Formula for public schools remains underfunded by almost exactly the same amount of money that goes to LIHTCs.
Learn More: Understanding the Foundation Formula
Compared to other states, Missouri is incredibly generous with LIHTCs. Only 14 states offer LIHTC programs and of them, only California and Georgia spend more money on those low income housing tax credits than Missouri does. (Source)
On the surface, this may not seem like a problem, but the reality is that LIHTCs aren’t an investment in Missouri or Missouri’s future. Studies have shown little to no return on investment for tax credits. To make matters worse, for every dollar spent on LIHTCs, more than half is lost to accounting, taxes, and middlemen.
According to the St. Louis Post Dispatch, only 43 cents of every dollar spent on low income housing tax credits (LIHTC) is spent constructing new housing. “The rest of the money is lost in an accounting haze or flows to federal taxes, investors, and middlemen.” (Source)
LIHTCs are the single biggest category of tax credits in the state. The Missouri Tax Credit Review Commission identified LIHTCs as the single most expensive tax credit to the state. (Source)
Unlike LIHTCs, education is an investment with a high return. Education, especially early education has proven time and again to bring money back to those who invest in it.
According to the Economic Policy Institute:
“States can build a strong foundation for economic success and shared prosperity by investing in education. Providing expanded access to high quality education will not only expand economic opportunity for residents, but also likely do more to strengthen the overall state economy than anything else a state government can do.” (Source)
The United Nations International Children’s Emergency Fund (UNICEF) cites early childhood education as a good investment for governments. According to UNICEF,
“Efforts to improve early child development are an investment, not a cost. Available cost-benefit ratios of early intervention indicate that for every dollar spent on improving early child development, returns can be on average 4 to 5 times the amount invested, and in some cases, much higher.” (Source)
LIHTCs provide little to no return on investment, while education offers a 400-500 percent return. Our lawmakers support LIHTCs but refuse to fund Missouri’s schools fully. This situation sounds to us like another example of #MissouriMath.
If you’d like to learn more about tax credits and Missouri public schools, come back often to the Missouri Parent Blog. We’ll continue to share information about legislation and funding issues that related to public education. Bookmark the blog or connect with us on Facebook or Twitter for regular updates.
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by MOParent filed under