Cause and effect: the Iowa Chamber Alliance can’t quite put them together. The umbrella group for Iowa’s chambers of commerce has issued its 2013 legislative agenda. The Des Moines Register reports (my emphasis):
TAXES: Iowa’s tax system is among the highest for businesses, the alliance contends, and commercial and property tax relief are needed. In addition, the group supports addressing unfunded mandates, public employee pensions and other measures to help offset rollback effects on local governments. The alliance also supports efforts to simplify and reduce corporate income taxes, and to streamline the personal income tax code.
So far, so good. But then:
ECONOMIC DEVELOPMENT: The Iowa Economic Development Authority needs money for flexible incentives to compete for investments and jobs, the allliance said. It backs a variety of tax credits to retain, grow and attract investments in Iowa, including restoration of the $185 million cap on economic development tax credits.
Let’s spell this out: Iowa’s tax code needs simplification because it is larded with “economic development” provisions, including dozens of “economic development tax credits.” The rates are high because if they weren’t, the special breaks would keep it from raising any revenue. To say you want lower rates, a simpler tax code, and economic development credits is like saying you want to lose weight and you want some more cookies.
There is a better way: The Tax Update’s Quick and Dirty Iowa Tax Reform Plan.
Fiscal Cliff Notes
Tax Offer for Firms Pits Big vs. Small (Wall Street Journal):
If ideas proposed by the White House take hold—a long shot—rates for big companies likely would fall next year while those paid by many small-business owners through the individual tax system would rise.
That potential gap could encourage more companies to organize as corporations. For now, the prospect is strengthening alliances between Democrats and big-company CEOs on the one hand, and Republicans and small-business groups on the other.
It’s Warren Buffett and Goldman Sachs vs. the entrepreneur — influence and pull vs. the rest of us.
Patrick Temple-West, Tax offer pits big companies against small, and more (Tax Break)
Janet Novack, Will Your Retirement Be Thrown Off The Fiscal Cliff?
Howard Gleckman, Why the Senate’s Tax Bill is No Way Out of the Fiscal Impasse
IRS reminds taxpayers of “Savers Credit” (IR-2011-121) This non-refundable credit matches as much as 50% of taxpayer contributions to their IRA or 4o1(k) accounts. It works on joint returns with incomes up to $57,500 and single filers with incomes up to $28,750. Savings made when young can do great things when compounded over a career, and this credit makes it painful. Giving your recent grad starting out in the world some cash to fund an IRA can help build a nest egg and net a nice tax refund.
Andrew Mitchel, Doctrine of Constructive Receipt. You can’t avoid the income this year by waiting until next year to cash the check.
Paul Neiffer, Some Interesting Ag Cooperative Facts. Iowa leads the nation with total co-op sales of $22.4 billion.
Jason Dinesen, This Accountant’s Idea for Eliminating Kickoffs in the NFL. Without kicking, where does the “F” in NFL go?
The Critical Question: When a Tax Argument is Nonsense, Why Not Say So? (Jim Maule?
Why not? The 2012 Holiday Kitchen Gift Guide (Megan McArdle)
I can quit any time. I just need six more drinks. “Wind Energy Association Says Industry Can Survive Without Tax Credit” (Tax Analysts, $link):
The wind energy industry could be self-sustaining over the long term if its primary federal incentive is renewed in 2013 and then gradually phased out over six years, the industry’s trade association said December 12.
Because the last 20 years of the tax credit just weren’t enough for a good buzz.
Tags: iowa tax policy, maule, economic development, corporate welfare, Savers Credit, megan mcardle, Kay Bell, Janet Novack, greg mankiw, Paul Neiffer, Andrew Mitchel, Howard Gleckman, Quick and Dirty Iowa Tax Reform Plan, Jason Dinesen, Patrick Temple-West, The Critical Question, Martin Feldstein