The Missouri Certified Capital Company Tax Credit and the New Enterprise Tax Credit Programs Are Not an Effective Use of State Tax Credits
07/05/2004 — State Audit Report, Missouri State Auditor's Office
Conclusion:
The Missouri Certified Capital Company Tax Credit program is an inefficient and ineffective tax credit program. Based on the assumptions used when entering the Missouri Certified Capital Company program data into the model, the program will cost the state over $116.4 million and will create an average of 293 jobs for 15 years. The CAPCOs will collect $35 million in fees. The investment activity and job creation through 2003 occurred primarily in the St. Louis metropolitan area. The program would result in a total increase of gross state product of $414 million over the 12-year life of the program. However, that economic activity and the jobs created will not produce enough additional state revenue to offset the costs of the tax credits. The CAPCOs invested nearly $89 million and those investments were valued at $24.3 million as of December 31, 2003. Most of the CAPCOs will not be able to reach the 100 percent investment threshold without taking advantage of the statutory changes made in 2003.
Recommendation:
We recommend the Department of Economic Development and the General Assembly let the Missouri Certified Capital Company Tax Credit program expire without authorizing any additional tax credits.
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