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Posts tagged Michael Mazerov

State policies should focus on homegrown jobs

Posted March 15th, 2016 to Blog

2-3-16sfp-f1A recent report by Michael Mazerov and Michael Leachman finds that the vast majority of new jobs in a state are homegrown: They are created by start-ups and by firms already in the state who are expanding. Only 13 percent of new jobs come from new branch plants of out-of-state companies, or  actual plant relocations to a state. They argue that public policies need rethinking as a result:

“State economic development policies that ignore these fundamental realities about job creation are bound to fail. A good example is the deep income tax cuts many states have enacted or are proposing. Such tax cuts are largely irrelevant to owners of young, fast-growing firms because they generally have little taxable income. And, tax cuts take money away from schools, universities, and other public investments essential to producing the talented workforce that entrepreneurs require. Many policymakers also continue to focus their efforts heavily on tax breaks aimed at luring companies from other states — even though startups and young, fast-growing firms already in the state are much more important sources of job creation.”

Michael Mazerov and Michael Leachman. State Job Creation Strategies Often Off Base. Center on Budget and Policy Priorities, February 3, 2016. http://www.cbpp.org/research/state-budget-and-tax/state-job-creation-strategies-often-off-base#_ftn23

2010-PFw5464Posted by Peter Fisher, IPP Research Director

 

Editor’s Note: This also ran on IPP’s “Grading the States” website — gradingstates.org

Asleep at the Switch in Iowa

Posted July 9th, 2013 to Blog
Mike Owen

Mike Owen

Expedia, Orbitz and Priceline have caught us sleeping in Iowa.

Closing a loophole that lets those big online travel companies collect taxes on only part of sales taxes due on hotel room bookings is just one of four measures Iowa could take to lessen the drain of funds from state coffers before they are even collected.

A new paper by Michael Leachman and Michael Mazerov at the Center on Budget and Policy Priorities (CBPP) notes the four options for states. Iowa is one of only 12 states that has failed to take any of those steps. Besides correcting the problem with revenue lost from hotel bookings, CBPP recommends:

  • Broadening the tax base to include more services. While Iowa has a fairly broad base subject to sales tax, there are many exceptions to the state’s sales tax that have been successfully achieved by the business lobby. In general terms, CBPP notes that household spending has been shifting from goods to services for decades, yet most states haven’t updated their sales taxes to reflect this fact, costing states tens of billions of dollars each year.
  • Enacting an “Amazon law” to require large online retailers to collect sales taxes. Purchases made through large online retailers such as Amazon or Overstock are subject to sales tax, but retailers aren’t required to collect them in Iowa and 33 other states, at a cost of over $20 billion a year. This puts Main Street businesses in Iowa at a price disadvantage vs. those multistate operations selling the same book, boots, chain saw or prom dress that caught an Iowa consumer’s eye.
  • Extending the sales tax to Internet downloads. As with the Amazon loophole, the sale of computer software, music, movies, and various other goods delivered on the Internet are not taxed in 23 states including Iowa — even though those states tax the same items when sold in physical stores. Lost revenue: roughly $300 million a year.

The CBPP paper is a good look at an issue Iowa lawmakers have been reluctant to address.

This is one more way research has exposed that Iowa is permitting businesses to take advantage of its residents, by pushing the costs of public services onto other taxpayers, or damming the state’s revenue stream to block funds from flowing to the state. The Iowa Fiscal Partnership already has shown how big multistate corporations avoid corporate income taxes because Iowa refuses to close corporate tax loopholes the way several neighboring states do, and how big companies benefit from the kind of property-tax breaks passed this year. The new piece by CBPP shows sales taxes also are an area where big business makes big money at Iowa taxpayers’ expense.

All of these areas remain good targets for better, more accountable tax policy in Iowa.

Posted by Mike Owen, Executive Director