Last night I was in Cape Girardeau, Mo., to talk tax credit issues. I noted that the Missouri Legislature could eliminate hundreds of millions of dollars' worth of failing tax credit programs and basically wipe out the corporate income tax if it assigned the tax credit savings toward the tax's elimination — shifting the state from a system where the government picks winners and losers in business to a system whereby all businesses benefit equally with a reduced or extinguished tax. (I have discussed this before.) Missouri's tax credit problem is titanic, but its enormity also offers an opportunity to change the game when it comes to giving Missouri a competitive advantage in the national economy.

The good news? It seems the idea is picking up some steam with at least one Kansas City area legislator, who is considering a veritable tomahawk chop to some of the worst offending programs (via The Missouri Record):

[Sen. Will] Kraus's bill would eliminate certain tax credits and apply the savings from the programs to lower the corporate income tax rate. Kraus said he hoped there would be enough additional revenue to get rid of the corporate income tax all together.

"This would make Missouri a much more business friendly place for businesses to come. It eliminates the picking of winners and losers by different tax credits," Kraus said.

The measure would lower the low-income housing and historic preservation tax credits to 25 percent of their current value by 2016. The low-income housing credit costs the state $60 million a year, while the historic preservation costs $140 million.

The legislative session just began, so certainly a lot can change in the next few months that may temper my optimism. But in terms of policy, it is satisfying to see that the right, liberty, and free-market ideas are moving to the forefront of the state's agenda. The state must realign its economic development program to reflect that in practically every circumstance, the best allocators of capital in the market are the participants in the market themselves.

As my colleague Michael Rathbone noted, there are only three states in the country that do not have a corporate income tax or a gross receipts tax, and none of them border Missouri. It would be a great way to get a leg up on our regional competition by telling businesses that Missouri is not only business-friendly, but that its tax laws are simple, predictable, and unencumbering. It also means that the unseen cost of the corporate income tax — higher consumer prices that compensate for the taxes that companies pay — would disappear, lowering costs of Missouri goods and making Missouri corporations more competitive.

It would be the right thing for Missouri, and I hope Missourians give the idea serious thought.