Lack of tax cuts causes some Mo. businesses to consider moving shop

KANSAS CITY, Mo. — After Missouri failed to enact significant tax cuts, about 20 business people gathered on Tuesday morning to consider whether they should now leave Kansas City. Some say a big reason why they’ve remained in Kansas City is for amenities they can only find in an urban environment.

The Kauffman Center for the Performing Arts and other cultural attractions, combined with the charm of many urban neighborhoods, can’t easily be replaced when you move a business or home to the Kansas suburbs. Still, more Kansas City business owners are considering such a move, now that the Sunflower State has reduced certain forms of income tax down to zero.

When big firms like AMC or Teva Pharmaceuticals get huge tax breaks to move workers across the state line as the latest salvo in the economic border war, it makes news. But under the radar, a conservative public policy group says many more, much smaller limited liability corporations are starting to cross the state line.

And the movement is primarily in one direction: From Missouri to Kansas. That’s because Kansas recently wiped out all taxes on so-called ‘pass-through operations’. These are companies where profits go directly to the owners.

At the Show-Me Institute, small business LLCs say a six percent difference in state taxes, combined with the one percent city earnings tax is making staying in Kansas City quite costly.

“The differences are becoming greater and one of the problems in the central city is we have an escalation of public costs,” said Greg Allen, President of Allen Financial Corp., a Kansas City firm. “We must become increasingly more focused on that, more concerned about that.¬†We need to be smarter about resources in the central city. We don’t need to be building more Power and Light districts.”

Allen said he’s the only one of his six employees living in Kansas City, Missouri. But like a lot of people at the forum, as business leases expire, he’ll be weighing whether the extra money he would keep in his pocket by moving to Kansas is worth giving up what he likes about urban living: Being close to arts and entertainment.

Supporters of the city at the gathering say we need to continue investing in Kansas City. And yes, it does cost more to have the advantages of urban living.

“I live in the city because I am a young person, I like to go out. I like the access to restaurants, to locally owned restaurants and businesses and shops,” said Claire Cook of the American Federation of State, County and Municipal Employees. “I like access to what’s going on and things like that. You just don’t get that in the suburbs.”

Others told FOX 4 News when you combine the Kansas tax incentives with historic concerns about public education and crime in Kansas City, more may reach the conclusion that it’s time to get out.

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