New law webcast today! I will be participating in a webcast today on the new Fiscal Cliff law and other recent tax developments. The webcast, sponsored by the Iowa Bar Association, will start at noon. I will join Roger McEowen of the ISU Center for Agricultural Law and Taxation, and IRS Taxpayer Liason Christy Maitre. Cost: $35 for IBA tax school attendees and attendees of any 2012 CALT Farm and Urban Tax School; $35; $75 otherwise. Agenda here, registration page here. 2 hours of timely CPE and Tax Update fun!
No good will come of this. The 2013 session of the 85th Iowa General Assembly begins today, and the outlook for improvement in Iowa’s tax system is bleak. Iowa business groups have firmly embraced a state tax incentive policy based on taking money from all of us to bribe well-connected businesses to do things they would do anyway. From the Sioux City Journal:
Business groups like the Iowa Chamber Alliance, a non-partisan coalition representing 16 chambers of commerce and economic development organizations, are supporting a variety of tax credits to retain, grow and attract investments in the state. Those credits include restoring the $185 million cap on economic development tax credits that currently stands at $125 million for fiscal 2013.
Jason Hutcheson, chief executive officer of the Greater Burlington Partnership, said tax credits are a highly effective tool that deliver a high return on investment and are essential to retain, expand and recruit businesses and to attract technology and research. ICA members also are lobbying legislators to spend at least $25 million for business development incentives after the line item was shrunk to $15 million for the current fiscal year.
The politicians shed crocodile tears about just being forced to go along with a system based on them granting special favors:
Senate GOP Leader Bill Dix of Shell Rock said there is opposition to government choosing winners and losers with taxpayer-funded incentives, but he added, “There’s no question in my mind that an incentive policy is the world we live in. I don’t appreciate that and wish it wasn’t the case, but we do need a policy that includes incentives.”
You know what would be a real incentive to grow a business in Iowa? A much simpler tax system with lower rates, one eliminating the corporate income tax altogether. Something like The Tax Update’s Quick and Dirty Iowa Tax Reform Plan.
Instead, Iowa has a horrible system built around complexity and high rates, made less painful — even lucrative — for those with the connections and lobbyists to score targeted tax credits. The legislators hear from those people — not from the more numerous businesses who quietly set up shop in South Dakota or other more friendly tax climates.
The best we can hope for from the legislature is prompt action on ”coupling” legislation to conform Iowa’s 2012 tax law to the federal changes passed earlier this month. The 2012 filing of many Iowa returns is on hold until they do so. We’ll see if they can even accomplish that much.
What does the Worst IRS Commissioner Ever do for an encore? He becomes a guest scholar at the Brookings Institution, which may never recover (TaxProf)
Scott Drenkard, Governor Jindal’s Bold New Tax Plan (TaxPolicy Blog). Could you live with a higher state sales tax if the income tax goes away? Even if it taxes accounting services? Tempting.
Paul Neiffer, Good News – Certain Credits Offset AMT
Joseph Thorndike, Peggy Noonan and the Beleaguered 1 Percent
News you can use: States to seniors: Good times may be ending, and more (Patrick Temple-West, Tax Break)
The Critical Question: Your Money Or Your Life – Which Can You Deduct ? (Peter Reilly)
That’s what they say, anyway. White House says no to Death Star. (Kay Bell)
At least she knows her constitution. Miss Iowa takes fifth! (TheBeanwalker.com) UPDATE!!! Miss America Contestant Says Marijuana Should Only Be Legal For “Recreational Use and Health Care” (Mike Riggs, Reason.com). So don’t smoke at the office.