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Posts tagged Economic Opportunity

A spotlight, not a floodlight, on business breaks

Posted March 21st, 2017 to Blog

A bill in the Iowa House, HSB187, would cut a range of Iowa tax credits, eliminating refundability and capping overall spending on credits. There is significant opposition, because people like their tax breaks. But the issue is suddenly in the spotlight because these and other giveaways are responsible for Iowa’s serious revenue challenge.

There are solutions to the state’s rampant and often unaccountable spending on tax credits and other tax breaks. It is interesting that an interim committee that meets every year to examine a rotating set of tax credits has not produced any reforms. It’s not because reforms are not necessary. Rather, it’s a lack of resolve.

One of several strong recommendations in January 2010 by a Special Tax Credit Review Panel appointed by then-Gov. Culver in the wake of the film credit scandal was for a five-year sunset on all tax credits. This would require the Legislature to re-approve every tax credit.

That would be a start. Another option: Instead of eliminating refundability for all credits, which affects even credits where refundability makes sense (Earned Income Tax Credit), limit it where it does not. The Special Tax Credit Review Panel recommended eliminating refundability for big recipients of the Research Activities Credit (companies with gross receipts over $20 million). Another option would be to cap refundability for all credits at $250,000, which would not harm small players, either businesses or individuals, and would reduce the excessive checks to big businesses.

The scrutiny and demand for a return on investment on these credits would be too much for many of these special arrangements to withstand. Eliminating or capping wasteful credits would free up revenues for other priorities; some would invest more here or there — education, or public safety, or the environment — and some would simply use it to reduce overall spending. But either way, we would have the opportunity for a debate.

There is a danger in putting everything on the table at once. It presents a false equivalency of tax credits — that they are somehow all the same. It ignores the fact that some are for private gain and some for the common good, and some are a mixture. Some work, and some do not.

Some meet the purpose for which they were advertised (the Earned Income Tax Credit, for example, which benefits low-income working families), and some miss the mark with tens of millions of dollars every year (the Research Activities Credit, where most of the money goes to huge, profitable corporations that pay little or no income tax instead of to small start-ups as envisioned).

Iowa’s business tax credits will have risen by half from 2011 to 2021 under current official projections. That is where the spotlight needs to be.

Challenging all credits at the same time gets everyone’s backs up. That is a recipe to assure continued unwillingness to take on any of it. And that will not serve Iowa very well.

Posted by Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org


Less government means ‘less us’

Posted March 1st, 2017 to Blog

Imagine new occupants of a large historic building who decide to do a major remodeling project, and they do not take the time to learn how the building was built and what previous structural changes were done to the building. They tear into this column, that wall, or that beam, without thinking that these are indeed load-bearing walls and beams that keep the building standing.

The remodeling fever we are seeing in Washington and the Statehouse involve trashing all things public: public schools, public services, public health, and public employees — the load-bearing foundations of democracy and daily life.

The most meaningful insight I gained from serving on the City Council involved learning the functioning of government at the community scale: police protection, fire protection, water, sewer and inspection services, planning services, utilities, arts and cultural services, a fantastic library, community center, great schools and services for children with special needs. I get up every morning thinking about these public services and the people who make them happen, and I am grateful.

That is why I find it astonishing that so many people continue to fall for the falsehood that “government is bad.” Many of us immigrants have come from countries that have fallen apart in violence and disorder in the absence of a functioning government. Thousands of U.S. troops have died to establish a decent governing process in Iraq and Afghanistan, but here at home, we are told government is bad, private-everything is good, corporations are the greatest, and all things public are bad. Do our troops serving in Afghanistan know about the rush to diminish government at home?

Because government means “us,” less government means “less us.” It almost always means more corporate interest, not public interest, making decisions for us, and invariably leads to more inequality, injustice, and disparity. Worst of all, it means fewer public services. We have heard “government should be small,” but why have we not heard “corporations should be small and their influence on government limited?”

Less self-governance, providing fewer services, has produced results: contaminated eggs sickening thousands and contaminated meats killing children because we have not inspected and protected our food supply. Inspection services supposedly are “too much regulation.” Toxic releases, polluted air, contaminated drinking waters, the national financial crisis are all clear and predictable results of “less regulatory burden,” “less government” and more corporate irresponsibility.

Let us not forget that our properties, our lives, our neighborhoods, and our businesses are richer and better because there is police and fire protection, law, order, a system of fair courts, and regulations. We are better off because we are situated in and are beneficiaries of a publicly organized infrastructure that offers basic services to all, including protecting Iowa’s commonwealth which provide ecosystem services such as clean air and clean water. Public works.

While the process of governing ourselves is not perfect and can be improved, “less government” is no improvement. We are the lucky beneficiaries of many generations before us who gave so much to build this nation, but, as many of us immigrants know, democracy and self governance are highly perishable. They are not something we have, but something we have to make every day and nurture through our involvement. Like a garden, you have to tend it.

kamyar-enshayan5464300Kamyar Enshayan served on the Cedar Falls City Council from 2003 to 2011. Enshayan is director of the Center for Energy and Environmental Education at the University of Northern Iowa, where he teaches environmental studies. He has been a member of the Iowa Policy Project board of directors since July 2016.


Today’s virtual House graphic: Iowa impact of ACA repeal

Posted February 23rd, 2017 to Blog

170119-IFP-ACA-F1

Yes, whatever actions are taken on the Affordable Care Act will come from Congress, but state legislators may be left to pick up the pieces. Iowa legislators, are you paying attention? Are you talking to your federal counterparts about this? (Some are in the state this week.)

What many may not know is the impact the ACA has had on reducing the uninsured population in Iowa. The Medicaid expansion under the ACA is one of the big reasons we have seen a greater share of the Iowa population covered by either public or private insurance.

For more information on how the ACA has affected uninsurance in Iowa — and the stakes of repeal without an adequate replacement — see Peter Fisher’s policy brief, Repealing ACA: Pushing thousands of Iowans to the brink.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate the impact on Iowa, and potentially on state finances and responsibilities, if the federal Affordable Care Act is repealed.


Kansans deliver tax-cut cautions for Iowans

Posted February 15th, 2017 to Blog

As part of Moral Mondays at the Iowa State Capitol, Iowa advocates and lawmakers this week heard a cautionary tale from Annie McKay of Kansas Action for Children and Duane Goossen of the Kansas Center for Economic Growth.

Annie McKay, president and CEO of Kansas Action for Children, speaks at the Moral Mondays Iowa event this week at the Iowa State Capitol.
Annie McKay, president and CEO of Kansas Action for Children, speaks at the Moral Mondays Iowa event this week at the Iowa State Capitol.

At a time when Iowa lawmakers are considering significant tax cuts, McKay and Goossen, who analyze and promote child policies and conduct analysis of the Kansas state budget, traveled to Des Moines to outline the effects of what has become known as the “Kansas experiment,” a set of draconian tax cuts passed in 2012.

At that time, Goossen recounted, Gov. Sam Brownback promised the cuts would bring an economic boom to the state, with rising employment and personal income. People would move to Kansas. It would be, the governor said, “like a shot of adrenaline into the heart of Kansas economy.”

But, five years on, the promised economic boom has not arrived.

“Business tax cuts were supposed to be magic, they were supposed to spur job growth — and they didn’t,” said Goossen, a former Republican state legislator and state budget director under three governors.

In fact, since 2012 job growth in Kansas has lagged behind its Midwestern neighbors, including Iowa. The state has, however, seen years of revenue shortfalls and damaging budget cuts, eroding critical public services like K-12 and higher education, human services, public safety and highway construction.

In this period, the state has depleted its budget reserves, robbed its highway fund to shore up its general fund, borrowed money and deferred payments in order to balance the budget. Kansas has experienced three credit downgrades. Lawmakers have raised the sales tax twice and repealed tax credits that helped low-income families make ends meet.  (In fact, the bottom 40 percent of Kansans actually pays more in taxes today than before the 2012 tax cuts went into effect.)

These actions have real impacts. Last year, Kansas saw the third biggest drop in child well-being among states as documented by Kids Count. Its 3rd grade reading proficiency ranking fell from 13th to 30th.

“What we did in Kansas – there is no proof behind it,” McKay said.

Iowans today are better positioned to stand up to damaging tax cuts than their Kansas counterparts were five years ago, McKay said. “We did not that have same people power in 2012.” She advised Iowa advocates to make crystal clear how all the issues currently generating widespread interest — education, health and water quality among them — are linked to the state’s ability to raise adequate revenue.

“You are ahead of where we were,” she said. “You have the opportunity to not be like Kansas.”

 

annedischer5464Posted by Anne Discher, interim executive director of the Child & Family Policy Center (CFPC).
adischer@cfpciowa.org

McKay and Goossen’s talk Feb. 13 at the Iowa State Capitol was coordinated by the Iowa Fiscal Partnership (a joint effort of CFPC and the Iowa Policy Project) and supported by the Center on Budget and Policy Priorities. CFPC, through its Every Child Counts initiative, is one of more than two dozen sponsors of Moral Mondays, a weekly gathering during session to highlight issues that advance Iowa values like equality, fairness and justice.


Today’s virtual House graphic: Iowa impacts of ACA repeal

Posted February 9th, 2017 to Blog

Editor’s Note: The Iowa House of Representatives voted Monday to deny the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, we will offer examples. Here is today’s graphic, to illustrate what could be expected to happen in Iowa if Congress repeals the Affordable Care Act.

170119-IFP-ACA-F2xxRepealing the Affordable Care Act (ACA) without an adequate replacement, as Congress and the incoming Trump administration appear poised to do, jeopardizes the health care coverage and economic well-being of the most vulnerable Iowans. About 230,000 fewer Iowans would have health coverage in 2019 if the law is repealed, including 25,000 children.

In fact, repeal of the ACA could leave tens of thousands of adults uninsured who actually had insurance prior to the ACA. Some 69,000 Iowans covered by an Iowa program, IowaCare, became part of the Iowa Health and Wellness Program with the advent of the ACA, while even more Iowans had insurance with the help of ACA subsidies.

Repeal leaves all three of those programs gone — IowaCare, Iowa Health and Wellness, and the ACA subsidies. Thus, fewer will have insurance than in 2013, prior to the ACA, and low-income Iowans will be worse off. This is an issue that state legislators may be left to address with no help from the U.S. Congress, but is not getting attention at the Iowa Statehouse.

For more information, see this Iowa Fiscal Partnership policy brief by Iowa Policy Project Research Director Peter Fisher.


IPP Statement: IPERS is strong

Posted January 31st, 2017 to Blog

Governor Branstad and Lieutenant Governor Reynolds are discussing a potential task force to examine whether to replace the IPERS defined benefit pension plan with a defined contribution plan, like 401(k) plans.

The Iowa Policy Project, which has researched this issue already, today released this statement:

The governor’s proposed task force on public pensions is unnecessary. The evidence is clear that a defined contribution plan is inferior to a defined benefit plan in the fundamental purpose of a pension: to assure a secure retirement for an employee. The IPERS law also clearly states its purpose of reducing turnover and attracting high-quality public workers.

Therefore, any task force should be charged with those two fundamental tasks: (1) assuring a secure retirement for public employees, and (2) enhancing the ability of the state to attract and maintain good workers. Public employment should not be reduced to temp work.

It is noteworthy that the assurances offered current employees — which include the Governor, Lieutenant Governor and state legislators — pit current employees against future employees. It would replace a secure retirement with one at the mercy of the ups and downs of the stock market.

IPERS is strong — stronger than most such systems and stronger than it was after ill-advised underfunding and a recession. As long as legislators do not take the easy way out and choose to underfund this fundamental responsibility again, there is no reason to consider a change. A fair task force will discover this.

The effort to change this stable and secure pension plan for public employees is driven by political arguments — not economic or fiscal arguments. To better understand the issues and the political spin that is clouding them, see also these newspaper guest opinion pieces:

Alarmist rhetoric sells Iowa pension plan short,” by David Osterberg in the Cedar Rapids Gazette, December 2013

Strengthen, don’t break, Iowa pension plans,” by Peter Fisher in the Iowa City Press-Citizen, March 2014

 

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project

Contact: mikeowen@iowapolicyproject.org


Welcome silence on tax cuts; too much silence elsewhere

Posted January 10th, 2017 to Blog
Against a backdrop of calls for new tax cuts, Governor Branstad in his silence sounded a note of caution.

In fact, the Governor’s apparently final Condition of the State message was notable for several issues that he chose not to address or promote.

Iowans who are vulnerable economically are looking for answers, yet there was no discussion of an increase in the minimum wage, now stagnant for nine years at $7.25, or of protecting local minimums above it.

The Governor offered no guidance for the Legislature and the public for what could happen with health coverage if Congress repeals the Affordable Care Act or imposes new restrictions on Medicaid. These issues could quickly become the most pressing in our state as the Governor prepares to leave office for his ambassadorship to China.

At the same time he encouraged Iowans “to ask the tough questions that challenge the status quo” about services and state commissions, he declined to make the same charge regarding Iowa spending on tax breaks — even though General Fund tax credits have more than doubled in just 10 years, with reforms long past due.

At the same time he set a goal for 70 percent of the workforce to have post-high school education or training by 2025, he was promoting $34 million in cuts in higher education from the current year budget.

At the same time he promoted a House-passed plan to divert General Fund revenues to fund water-quality efforts, he again rejected a long-term, dedicated and growing source of revenue — a three-eighths-cent sales tax as authorized by voters in 2010 — that would not compete with existing needs.
There will be much for Iowans to review in the budget proposals as they make their way through the legislative process, along with issues including public-sector collective bargaining and other big issues affecting working families in the coming weeks and months.

It is reassuring that the Governor chose not to grab the tax-cut mantle so strongly on his way out the door. But he is missing an opportunity to rein in or even reverse Iowa’s runaway spending on tax credits, which has contributed to unmet needs in our state.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
mikeowen@iowapolicyproject.org

County Minimum Wages Spread their Benefits Widely

Posted January 4th, 2017 to Blog

It’s not just four counties that benefit from the higher local minimum wages that go into effect this year. Those four counties — Polk, Linn, Johnson and Wapello — account for a third of all private-sector jobs in the state. And a large number of people holding those jobs live in neighboring counties.

Polk, Linn and Johnson counties are the hubs of metropolitan areas, surrounded by counties where a sizeable share of the workforce commutes to the hub. Those commuters earn higher wages thanks to the county supervisors in the three counties. And they come home to spend those higher wages at local gas stations, restaurants, grocery stores and other retail shops. They hire local plumbers and builders and electricians. In all, at least 12 counties in addition to Polk, Linn and Johnson will see a substantial increase in resident incomes and local purchases as a result of those three county minimum wages.

The map below shows the percentage of lower wage workers in each suburban county who are employed in the hub county with the higher minimum wage.[1] Clearly, any action by the Iowa Legislature to roll back county minimum wages would harm the workers and the local economies in many of the state’s most populous counties.

Iowa 03-BLUE-counties

[1] Lower wage is defined as earnings of $3,333 per month or less. Restricting it to those earning $1,250 or less results in very similar percentages; the lower figure, however, would represent a wage of even less than the current minimum for someone working full time, whereas the county minimums when fully phased in will benefit all those earning under $10.10 (Johnson) to $10.75 (Polk), and some workers above those levels. These earnings cutoffs were the only ones provided in the Census data.

2010-PFw5464Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org


Mission accomplished — no cuts needed

Posted December 30th, 2016 to Blog

Tax-cutters are in hog heaven in Iowa these days. They soon assume the levers of power at the State Capitol and they are planning to use them — no matter the consequences.

But if they truly believed their own mantra about the economic glories of low taxes, they would be shouting “Mission Accomplished” from the top of the Capitol dome. For all their talk of making Iowa “competitive,” they would realize we are already there, and have been for many, many years.

Once again, the national accounting firm Ernst & Young has examined the range of state and local taxes affecting businesses in every state plus Washington, D.C., and found Iowa is in the same place it always lands — the middle of the pack.

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Twenty-three states and D.C. tax business more heavily than Iowa, which is tied for 25th with six other states including neighboring Minnesota. Even South Dakota, despite a low-tax image trumpeted by western Iowa politicians, is slightly higher than Iowa.

That is because responsible tax policy demands a comprehensive look at the impact of all pieces of the tax structure, as Ernst & Young does. Cherry picking only one tax that appears high — appears being the key word because this can be complex — ignores other offsets in the tax code.

Yet, the post-election rhetoric has been a lot about tax cuts — tax cuts we cannot afford.

To the extent state and local taxes matter in business decisions — and there is considerable evidence that they do not, despite the political spin — Iowa already is well-situated. In other words, the concept of “competitiveness” can be overstated easily. A tax structure would have to be markedly different from others, producing high-tax results that we certainly don’t see in Iowa, to make a difference in business expansion and location decisions.

As we pointed out in 2014, Iowa is a low-tax state. This remains so. Why aren’t our elected officials promoting that if it is so important to them?

Having already implemented what the Governor promoted as the largest tax cut in Iowa history with massive property tax giveaways benefiting big-box retailers in 2013, and recognizing state revenues are coming in more slowly than expected, our leaders need to take a deep breath.

We cannot afford new tax cuts for business. For stronger economic growth, let’s turn the page and look at things that matter.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
mikeowen@iowapolicyproject.org

Iceberg ahead — but how big?

Posted December 21st, 2016 to Blog
060426-capitol-swwThe Des Moines Register disclosed Wednesday afternoon in a copyright story that the private, for-profit companies now running Iowa’s Medicaid program are finding big problems in the first year.

With big policy decisions ahead on the future of Medicaid, not only in Iowa but in Washington with a new administration, it is reasonable to wonder if Governor Terry Branstad’s go-it-alone Medicaid privatization is only the tip of the iceberg — and how big the iceberg may be.

Besides the great uncertainty for health-insurance coverage for millions if Congress repeals the Affordable Care Act (ACA) without a replacement, there is the idea that Congress might block-grant Medicaid. The goal would be to save the federal government money — not to assure health care for the most vulnerable as Medicaid now provides.

A block-grant approach means states would be allotted a share of funds for Medicaid, and when it is gone, that’s it — services would be cut. In that scenario, the decisions would be made in the states. As noted by Edwin Park of the Center on Budget and Policy Priorities:

Such a block grant would push states to cut their Medicaid programs deeply.  To compensate for the federal Medicaid funding cuts a block grant would institute, states would either have to contribute much more of their own funding or, as is far more likely, use the greater flexibility the block grant would give them to make draconian cuts to eligibility, benefits, and provider payments.

Maybe someone can provide the campaign literature from the 2016 legislative races that illustrates successful candidates’ thoughts on whose coverage would be the first to go. Who gets cut off? Someone will have to decide that if we go to a block-grant program.

It probably won’t be Governor Branstad making that tough decision, by the way. The new ambassador-to-be will be off doing diplomatic stuff in China when these hard decisions are made.

Is that what these new legislators signed up to do when they put their names on the ballot? But they could check in with Senator Grassley and Senator Ernst to find out if Iowa Statehouse job descriptions might change in the months ahead.

owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org