How about a trade: Corporate Income Tax for Corporate Welfare. Interesting numbers from The Des Moines Register:
The state awarded $278.5 million in tax credits during the 2013 fiscal year, down 9.3 percent from the year before, according to a new revenue report.
The department estimates that Iowa will have to pay a maximum of $436.9 million for fiscal 2014, and $487.9 million in fiscal 2015. Those numbers are considered the state’s “contingent liabilities.” However, the department expects claims on the awards will be less.
The department expects the state will pay about $337.9 million in fiscal 2014, and $366.8 million for fiscal 2015.
The entire net revenue from Iowa’s corporation income tax for 2013 was $403.6 million, with an estimate for fiscal 2014 of about $409 million. So the entire Iowa corporate tax system takes about $400 million from corporations and then hands over 75-85% of it to other businesses. Let’s consider the difference to be a fee for administering this system of taking from the productive and giving to the well-connected. It’s about a wash.
From the outside, the answer seems obvious: no tax credits, no corporation tax. Iowa would go from having one of the very worst corporation income taxes — and the one with the highest stated rate — to one of the very best. The downside is that it would displace a little industry of tax credit middlemen and fixers idle economic development officials. If that’s a downside…
Related: The Tax Update’s Quick and Dirty Iowa Tax Reform Plan.
Chelsea Keenan, Are tax incentives an effective economic development tool? (Cedar Rapids Gazette). “But an October 2013 study published in the Journal of Regional Science that examined the possible benefits to states that offer manufacturers tax incentives receive, and determined there is no measurable gain.”
Lyman Stone, Illinois Speaker Madigan Proposes 3 Percent High-Earner Tax (Tax Policy Good). Illinois is doing its best to make Iowa look good.
Jonathan Adler, Was Delaying the Employer Mandate Legal? Did the IRS Even Check? (Volokh Conspiracy, via the TaxProf):
The legal justification for the employer mandate delay offered by the Treasury Department has been exceedingly weak. Perhaps this is because the Treasury Department never considered whether it had legal authority to delay the employer mandate until after it made the decision to delay it.
More of the results-driven regulation we’ve been talking about.
Peter Reilly, Do Some Looking And Thinking Before Signing Form 1040 . “I’d like to suggest that you take a deep breath and actually look at your return before you take that final step.” Excellent advice.
Kay Bell, 4 tax breaks for older filers
William Perez: What to Do if You Get a Call from the IRS Asking for Money. If they haven’t contacted you by mail, hang up. It’s a scam.
Kristy Maitre, recently of IRS and now with the ISU Center for Agricultural Law and Taxation, tells how to go about Requesting the Transfer an of IRS Audit. “Do not simply say that you want to transfer the audit. That will result, in nearly all cases, with a non-transfer. You must state your case.”
Jack Townsend, Another UBS Depositor Indicted; the Russian Connection
Keith Fogg, What is the scope of a tax lien discharge versus the remaining tax lien (Procedurally Taxing)
Joseph Henchman, Kevin Spacey at Annapolis Bar Tonight to Lobby Legislators for Subsidies (Tax Policy Blog):
Kevin Spacey is my favorite actor—I spent my entire recent vacation flight watching his movies—so it’s hard for me to say bad things about him. But he’s also a celebrity with an alleged net worth of $80 million lobbying for tax subsidies from Maryland taxpayers.
Sure, asking folks to subsidize Hollywood millionaires may seem odd, but as an Iowan said during the height of our starry-eyed film credit debacle:
But some benefits can’t just be measured on a dollar-for-dollar basis. The movies provide employment to local actors, construction crews, artists, caterers, drivers and a host of others. They expose non-Iowans to what the state has to offer. More intangible is the benefit of interactions in a state that can be cut off from the trends and centers of power. Not to mention the excitement factor. We’ve relied on caucuses every four years to bring action and celebrities to town. Now, sightings are anytime, any place.
So pay up, peasants! You might see a star!
Renu Zaretsky, Tax Talk in the District, the Midwest, and Abroad. It’s the TaxVox news roundup.
Tax Justice Blog, Big News in Ohio: Governor’s Unfair Tax Cut Plan Unveiled.
Annette Nellen,Book recommendation – Geezer Rap
TaxProf, The IRS Scandal, Day 319
News from the Profession. PwC Competing Against Shaving, Toys and Delicious Food for Guinness World Record Award (Going Concern).
Sometimes bad examples are the best teachers. Blogger Russ Fox provides some with his “Bozo Tax Tips” series for this year, beginning with Bozo Tax Tip #10: Email Your Social Security Number. Don’t do it! “As I tell my clients, email is fast but it’s not secure.”
Tags: Annette Nellen, Chelsea Keenan, corporate welfare, economic development, Going Concern, iowa tax policy, Jonathan Adler, Joseph Henchman, Kay Bell, Keith Fogg., Kristy Maitre, Lyman Stone, News from the Profession, Peter Reilly, Renu Zaretsky, Russ Fox, TaxGrrrl, TaxProf