Fields of dreams and cash cows: the Iowa legislature at work on the tax law

March 23rd, 2012 by Joe Kristan

Fields of Dreams: The Iowa General Assembly is poised to pass a sales tax giveaway for a “Field of Dreams” athletic complex at the site where the Kevin Costner movie was shot.  The deal is similar to one set up for the Newton race track, allowing them to charge sales tax but keep it for themselves.  The legislature is charging ahead despite wise warnings against it:

“I think it’s a very dangerous road to go down,” Iowa House Ways and Means Chairman Tom Sands, R-Wapello, told IowaPolitics.com. “The state started down that road just a little bit with the racetrack, and now, here are two other proposals that are coming off of that. So the next question is, so where will this end?”

If it’s anything like the film tax credit program, supported with even more enthusiasm in the legislature, it will end in scandal, embarrassment and disgrace.

100% state funding for “innovation.” The “Economic Growth/Rebuild Iowa” committee voted for HSB 648, increasing a 20% tax credit for investments in a “innovation fund” to 100% (100 freaking percent) for a three-year period.  The credit would ratchet down to 75% the next year, then 50% for a year, before returning to 20%.  The tax credits could be sold.    This means that “investors” in the fund would be fully subsidized by you and me, but the profits will be private.  Downside to us, upside to them.  What could possibly go wrong?

Special tax break for executive stock bonuses.  The Iowa House Ways and Means Committee is considering HF 2311, a bill that would provide a one-time election to not pay Iowa tax on gains from stock received by employment, if you work for the right company.  Because of the way it is written, it would apply mostly to executives of big companies.  Because Iowa needs a special tax exemption for executives of big companies with big stock gains more than just about anything.

ESOPs. Meanwhile, HF 2284, creating a special tax exemption for certain stock sales to employee stock ownership plans, hasn’t moved since arriving in the Senate Ways and Means Committee two weeks ago.  Is it possible that the legislature will actually refrain from passing a narrowly-crafted tax break?

Instead of trying to shovel our money to all of these narrowly targeted and well-lobbied interests, it would be far better to just give us all a simple system with low rates.  I’d hate for the legislature to go into overtime, but it would be worth it if the result was enactment of the Quick and Dirty Iowa Tax Reform Plan.

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