Iowa: Don't Tax Under 30?This morning the Des Moines Register ran with the headline "Don't Tax Anyone Under 30" - naturally above the fold in big, bold words.
The story revolves around Iowa Senate Repubicans revealing their take on stopping the "Brain Drain" of our college graduates:
Iowans younger than 30 would pay no state income taxes under an economic-growth plan unveiled Tuesday by Senate Republicans - an idea that drew cheers and jeers from young and old.
"More than half of our college graduates leave the state after graduation. We want to reverse Iowa's brain drain and make our state a more attractive place for our young people," said Senate Republican Co-President Jeff Lamberti of Ankeny.
Of course, none of this comes for free:
Eliminating the income tax for those under 30 would reduce state revenue by an estimated $200 million a year, according to the nonpartisan Legislative Services Agency.
A few points:
1) As a former 'college graduate who left the state', trust me: this won't make a difference. It's job quality and cultural options that are more important - plus the draw of embarking on a new adventure. We can improve job quality and cultural options, but there really isn't much we can do abotu the 'new adventure' seekers.
2) As we already know - state finances are drawn as tight as they can be in the current circumstances, plus other programs are being burdened with growing costs - most often due to the ever-increasing costs of health care. Because the constitution requires the state to run a balanced budget - a loss in revenue from one source will have to be balanced by a gain elsewhere.
Quite frankly, I'm a little shocked that anyone would treat this proposal seriously, given the financial conditions the legislature has to face.
The more interesting proposal got "B-Side" coverage:
The GOP plan, an alternative to the Grow Iowa Values Fund created
two years ago, would give businesses a tax credit for newly created
jobs paying at least $10 an hour. The tax credit would be available for
up to five years, with a maximum annual credit of 20 percent of the
salary.
"This is a market-based approach to drive economic development," said Lamberti, 42, the Senate Republican co-president.
"We
don't need the government in the business of picking winners and losers
and handing out money only to select companies. We want any company to
consider growing in Iowa," he said. "So we don't care if you're a small
business in Iowa that the Values Fund would never touch, or a Wells
Fargo."
Another proposal is to enlarge a state fund for assisting local governments with the development of community attractions. The fund would increase from $12 million to $25 million annually over five years.
Business groups applauded the plan.
"I think it's a creative, private-sector approach, and it seems to be comprehensive. It's not just looking at one silver bullet," said John Gilliland, a vice president of the Iowa Association of Business and Industry.
There is something to be said about making sure that "Grow Iowa Values" money is equitably spread - but on the flipside there needs to be the realization that two major needs to start a new business are startup capital and risk management. Tax credits likely won't help in new (or small) business situations.
