February 22, 2008
Christian Saller Talks Tax Credits in The Business Journal Today
Tower Grove East resident Christian Saller may be known to folks in any or all of the following capacities - neighbor, Board member of DeSales Community Housing Corporation, President-elect of the Tower Grove East Board of Directors, recent candidate for Alderman of the 6th Ward. Additionally, he serves as Communications Director for the Missouri Coalition for Historic Preservation and Economic Development. In the latter capacity he has written an opinion that appears in today's St. Louis Business Journal with regard to pending legislation the Coalition believes poses a serious threat to Historic Tax Credits, as well as Missouri's general economic health.
Christian is extremely knowledgeable about architecture, real estate, housing issues, and economic development, and he is an excellent advocate for the Coalition. Please check out his thoughts below.
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To The Editor:
Legislative Threat to State Tax Credit Programs Spells Disaster for Our Region and State
Missouri State Representative Bryan Stevenson’s (R-128th) House Bill 1551 seeks to eliminate the state corporate income tax by January 1, 2013. Phasing out the corporate income tax will not increase Missouri’s position in the economic development arena compared to the competition. On the other hand, for ten years, Missouri has been a national model for its progressive tax credit programs, especially that for historic preservation, and elimination of the corporate income tax now or in the near future will gut this legislation. According to the Missouri Department of Revenue, a large percentage of tax credits are redeemed by corporations. Renovation of historic structures all over the St. Louis region during the past decade, from virtually every single loft conversion project downtown to individual historic homes to entire neighborhoods all over the city, would not have occurred without the Historic Tax Credit. When federal tax credit laws changed in 1986, numerous renovations became unfeasible and buildings that would have been saved and used productively remained vacant and boarded and in some cases were lost forever to the wrecking ball. House Bill 1551 will have a similar effect not only on St. Louis and Kansas City but on smaller communities throughout the state that utilize the Historic Tax Credit in concert with the Main Street Program to revitalize their commercial districts and create jobs. Loss of the Historic Tax Credit has economic implications that go far beyond the “cause”, however worthy, of saving historic architecture.
The distortion of Historic Tax Credits as a bottom-line “giveaway” is demonstrably false. According to studies by Rutgers University, the Missouri Department of Economic Development, Missouri Preservation, and accountants Rubin, Brown, Gornstein & Co., the Historic Tax Credit is a revenue-generating tool that returns to the state far more in direct benefits than is spent in credits. For every $1 granted in State Historic Tax Credits, $1.25 is returned directly to state coffers through taxes with an additional $1.78 in state personal income taxes, sales taxes, and corporate income taxes, for a total of $3.03. Only qualifying structures are eligible and they must be renovated to exacting standards and put into service before any credits are issued. Those who pursue the credits must also invest four times the amount of the resulting credits in order to receive them when the renovation is complete. Contrary to contentions of its uninformed detractors, there is already ample oversight, regulation and restriction in the administration of the Historic Tax Credit. In addition, the Rebuilding Communities Tax Credit program has caused over 90 small fast-growth businesses such as biomedical, internet and technical companies to start up in or expand in the City of St. Louis.
The purported goal of House Bill 1551 is to make Missouri more competitive. In its eradication of vital tax credit programs, it will have the opposite effect. If additional states eliminate their corporate income tax, Missouri will end up with no advantage and a huge disadvantage. Key planned economic development projects and historic renovations in our region and throughout the state will not happen. New businesses anticipating use of the Rebuilding Communities Credit will not be able to start or expand. Under the current law, businesses investing in these economic development projects manage their tax liability by using the market for credits and creating a win-win situation: taxes are reduced and development occurs.
Other states seek to emulate our tax credit legislation because its economic benefits have been repeatedly studied and proven. Its stunning impact can be plainly seen on streets and neighborhoods from Carthage to Hannibal and from downtown St. Louis to Kansas City. These other states see what we have and wish they had it themselves. Our own legislators must see that rashly discarding these vital programs would be a giant economic leap backwards for Missouri. Our tax credit programs bring investment and revenue to our economy and positively distinguish us from other states. Sacrificing them by eliminating the corporate income tax would be a short-sighted and tragic trade.
Christian S. Saller
Missouri Coalition for Historic Preservation & Economic Development
St. Louis