Crony tax credits have become an issue in Iowa’s race for Governor, reports The Des Moines Register:
The Republican Governors Association is out today with another TV ad attacking Jack Hatch.
The new ad accuses Hatch of sponsoring legislation to increase the availability of development tax credit while applying for tax credits for a real-estate project in Des Moines.
“Jack, isn’t that a conflict of interest?” the narrator asks.
It’s true that Mr. Hatch has been a successful player in the tax credit game. It may be the merest coincidence that an awful lot of tax credits go to political insiders like Mr. Hatch and the spouse of Governor Branstad’s opponent in his first election. But that’s not the way to bet.
While I’m all for anything that spotlights the inherent corruption of targeted tax credits, the Republican Governors Association may be inadvertently bringing friendly fire uncomfortably close to its own man. For starters, the Governor is a five-term incumbent. If the system is set up to be played by political insiders, the Governor has had plenty of time to do something about it.
More importantly, political insiders can benefit richly from crony tax credits without claiming them on their own tax returns. They benefit by claiming credit for the “jobs” generated by well-connected businesses that play the system to get the tax credits. The Governor has played this game tirelessly. Just off the top of my head
In deals like this, the politicians claim credit for the jobs “created,” with no regard whether the lucky recipients of the breaks would have behaved differently without them, or for the jobs lost by other companies who compete with the winners for resources and customers, or for the jobs that would have been created had the funds been left with taxpayers to use without direction from politicians.
So yes, Governor, by all means call down the artillery on crony tax credits. Just be sure to keep your helmet on.
Roger McEowen, Eighth Circuit Hears Arguments in CRP Self-Employment Tax Case. “It would appear that the oral argument went well for the taxpayer.”
Jana Luttenegger, IRS Releases Taxpayer Bill of Rights. “ These rights have always existed, but now the IRS has put the rights together in a clear, understandable list to be distributed to taxpayers.” If they’ve always existed, they sure haven’t always been respected.
Peter Reilly, Your Son The Lawyer Should Not Be Your Exchange Facilitator. Peter talks about the case I mentioned earlier this week, including another issue I left out.
Tax Justice Blog, Reid-Paul “Transportation Funding Plan” is No Plan at All:
Instead of taking the obvious step of fixing the federal gas tax, Reid and Paul propose a repatriation tax holiday, which would give multinational corporations an extremely low tax rate on offshore profits they repatriate (profits they officially bring back to the United States). The idea is that corporations would bring to the United States offshore profits they otherwise would leave abroad, and the federal government could tax those profits (albeit at an extremely low rate) and put the revenue toward the transportation fund.
Yeah, not a real fix.
Scott Hodge, Likely “Solutions” to Highway Trust Fund Shortfall Violate Sound Tax Policy and User-Pays Principle (Tax Policy Blog)
Andrew Lundeen, Higher Marginal Tax Rates Won’t Improve the World (Tax Policy Blog). “The Upshot and Dave Chappelle may be right that for someone with a $100 million that next dollar might not means as much as the first dollar. But that money doesn’t sit collecting dust. It is invested in the broader economy.”