FAIRWAY, KS — Texas and Missouri no longer square off as Big 12 opponents, but governors Rick Perry and Jay Nixon—with some help from Missouri’s media—have ignited a new interstate rivalry.
Perry, a Republican, has recently taken his ongoing job-poaching tour to the Show-Me State, running radio and TV ads in Missouri markets, and making an appearance in Chesterfield, MO, to encourage local business owners to relocate to Texas.
The Texas governor’s visit was just a prelude to this month’s upcoming battle in the Missouri Legislature to override Nixon’s veto of a major tax-cut bill. The state Chamber of Commerce and other anti-tax groups sponsored Perry’s visit as part of an effort to persuade the Republican legislative supermajority to band together and override the veto, on the theory that the bill will make Missouri more competitive with states like Texas and neighboring Kansas. Perry, meanwhile, used the trip to make his own pitch to Missouri businesses.
Nixon, a Democrat, has reacted aggressively to counter Perry—and the local media has been quick to take Nixon’s side. St. Louis radio station KTRS pulled Perry’s ad on Aug. 23, declaring that “we feel the need to stand strong with other small locally owned business and defend our region.” Last week, Nixon rewarded KTRS with an ad buy of his own, lashing back at Perry and echoing the radio station’s warning not to “mess with” Missouri. At the same time, editorials in The Kansas City Star and St. Louis Post-Dispatch sided with Nixon, criticizing Perry and the groups in Missouri who were supporting him, and Charles Jaco of St. Louis’s KPLR-TV came out with a parody video lampooning Perry’s ad (also featured on the Post-Dispatch website).
It’s been entertaining to watch. But arguments in this regional war—from politicians and the press alike—have often been painted in broad strokes, with context and even simple facts getting lost in the fray. Here’s a look at what the different players have said, and where they’ve sometimes gone wrong.
Top 10 or ‘Terrible Ten’?
A centerpiece of Perry’s campaign is that Texas, which has no state income tax on individuals, ranks in the Top 10 in the conservative Tax Foundation’s State Business Tax Climate Index. The truth of this claim is easily confirmed, yet the Tax Foundation itself has complained that Perry is not telling the whole story.
“The Texas tax code has problems of its own,” wrote the foundation’s Lyman Stone
in June, zeroing in on the state’s “Margin Tax” on businesses, which he said “is excessively complex and non-neutral, and creates major compliance burdens on the firms that pay it.”
Indeed, the Tax Foundation gives Texas a fairly poor ranking—38th out of 50—on its measure for corporate taxation, which accounts for “the impact of each state’s principal tax on business activities. On this measure, in fact, it is Missouri that makes the Top 10, coming in at #8. According to the foundation’s measures, Missouri also outranks Texas in two other key categories: sales taxes (factoring in both statewide and local levies) and property taxes.
The Post-Dispatch and the Star highlighted these facts, which Perry had left out. The Post-Dispatch, however, in its zeal to turn Perry’s argument on its head and argue that “Taxes are higher in Texas” than Missouri, engaged in some selective citation of its own. The St. Louis paper left out the fact that the Tax Foundation still ranks Texas higher than Missouri on its overall business-climate measure—9th compared to 16th.
Stone of the Tax Foundation told me in an e-mail that the Post-Dispatch and Star pieces “look at several of the major categories we look at for our index: but they don’t mention that we weight those categories for the index. Texas, for example, does very well in our index because we put a very heavy weighting on the individual income tax. So it’s true Missouri actually beats Texas in several categories: but ask yourself which is more important, income taxes paid by millions of individuals and thousands of small businesses, or unemployment insurance?”
The foundation, Stone told me, gives the greatest weight in its index to the individual income tax, at 33 percent, followed by sales and corporate taxes at about 20 percent each, property taxes at 14 percent, and unemployment-insurance taxes at 11 percent.
Of course, journalists are under no obligation to weight these items in the same proportion as Stone’s group does, or to accept its conclusions. While the Tax Foundation places Texas in its overall Top 10, the liberal-leaning Institute on Taxation and Economic Policy actually lists the Lone Star State as one of the “Terrible Ten” in its own tax rankings, which measure the progressivity of state tax burdens. Texas ranks low here because it has no income taxes, which tend to be the most progressive form of taxation, but has relatively high sales and property taxes, which tend to be more regressive—hitting poor and middle-class people the hardest.
“When you think about Texas having high or low taxes, the question is for whom?” Matthew Gardner, ITEP’s executive director, said in an interview.
The ITEP report argues that “[s]tates commended as ‘low tax’ are often high tax states for low- and middle-income families,” adding that Texas is one of the 10 states with “the highest taxes on the poor.” Neither Perry and friends, nor any of the news or editorial pieces in Missouri that I read last week, mentioned the ITEP report.
In addition to the distribution of the tax burden, of course, there’s also a question of whether enough revenue is raised—and whether it’s spent usefully. Both the Star and Post-Dispatch editorials did make arguments for public investment in supporting Nixon’s veto of the tax cut. Gardner of ITEP also argued that businesses and individuals look at many other factors besides taxes when considering location, including education and infrastructure—two more measures on which he says Perry’s state falls short.
“Texas is chronically underfunding transportation and education,” he said.
A Perry Parody
Education was one of several issues cited by KPLR’s Charles Jaco in his parody video of Perry’s TV spot, in which the governor and other Texans featured in the ad are overdubbed to cite some of the state’s least boast-worthy attributes. This video offered a creative approach to covering the story, but some facts were a bit distorted in the process.
“We have the lowest percentage of high school graduates in America,” says one Texan in the parody video. The Austin American-Statesman’s PolitiFact Texas recently looked at this claim in another context and found it to be true, but it is important not to conflate this statistic with actual graduation rates, where Texas fares much better.
The parody ad claims that Texas has the most uninsured people of any state in the union. As it happens, this claim was also examined by PolitiFact Texas in a different context and found to be “mostly false,” though not far from the truth: in fact, California has the largest total number of uninsured, but Texas has the highest percentage.
Another claim in Jaco’s video is that Texas is “the second-poorest state” after Mississippi. This is not true; the latest Census figures do place Texas near the bottom in this category, with an 18.5 percent poverty rate, but there are nine states, in addition to Mississippi and the District of Columbia, which fare worse. Missouri is better off but has nothing in particular to brag about here, with a poverty rate of 15.8 percent, right at the national average. (When contacted for this report, Jaco acknowledged via email that he misread the poverty ranking on a February 2011 report from Texas Democrats that he used to gather information for the video. The report, which relies on older data, shows Texas with the fourth-highest poverty rate.)
Still, whatever their shortcomings, the Jaco video and the Star and Post-Dispatch editorials drew blood, calling into question whether Texas is the paragon Perry says it is.
But what of Perry’s claim in his radio ads that “[e]very year, more than $40 million are leaving Missouri for the Lone Star State”? The media in Missouri left this one alone, with the exception of St. Louis’s KSDK-TV, which took a crack at “fact-checking” the statement but ended up accepting the assurance of Grow Missouri—one of the conservative groups sponsoring Perry’s visit—that it was true. Only (you guessed it) PolitiFact Texas followed through in fully vetting the claim, ultimately rating it as “half true.” The PolitiFact checkers—with an assist from the Tax Foundation—were able to match Perry’s claim with IRS data from the last two decades, but noted that the truth is “more complex and admittedly clunky than this claim acknowledges.”
Does this prove that, whatever problems Texas may have, the lack of an income tax is luring masses of “job creators” from Missouri to Texas each year? Not according to ITEP’s Gardner.
“It doesn’t tell you a thing about why it’s happening,” he said. “There are a multiplicity of reasons why people live where they live and do what they do. You can’t just draw a straight line from taxes to economic growth or taxes to migration decisions.”
As the tax debate goes forward this month, it would be interesting to see Missouri reporters examine this question by talking to business owners (and workers) who have relocated to Texas, in order to find out what kind of decisions are shaping this apparent exodus.
In this maze of numbers, hard truths remain elusive. But the Tax Foundation’s Stone and ITEP’s Gardner ultimately agree that Missouri is “pretty average” or “middle-of-the-road” among states in their groups’ respective measures, while Texas’s unusual tax structure places it in the Top—or “Terrible”—10, respectively, depending on one’s point of view.
Perry’s visit was only the first big volley in Missouri’s tax-cut override battle, which begins in earnest when the legislature reconvenes next week. This month, as the lies, distortions, omissions, and statistics accumulate, Missouri’s reporters will have to steel themselves with the facts as much as possible—and make sure they aren’t compounding the misinformation.