IOWA SHOULD NOT SPEND $500 MILLION OVER THE NEXT FIVE YEARS BUYING GROWTH

BY: KEVIN MCLAUGHLIN   

THE FIRST RULE OF CAPITALISM IS THAT YOU NEVER PAY FOR ANYTHING THAT YOU CAN SIMPLY TAKE AWAY FROM YOUR COMPETITORS.  THAT'S WHAT MADE WAL-MART SO GREAT IN THE DISCOUNTING BUSINESS.  THEY STARTED OUT COMPETING AGAINST "MOM & POP" ENTERPRISES IN SMALLER TOWNS, AND THOSE SMALLER RETAILERS COULDN'T COMPETE AGAINST WAL-MART'S ECONOMIES OF SCALE.  CONSEQUENTLY, THEY GOT WHERE THEY ARE TODAY BY DISCOUNTING THEIR PRICES AND TAKING BUSINESS AWAY FROM THEIR COMPETITORS.  THEY'VE NEVER BEEN KNOWN FOR PAYING BUSINESSES TO BECOME PART OF THEIR ORGANIZATION.

GOVERNOR VILSACK, ON THE OTHER HAND, RECENTLY PROPOSED THAT THE STATE OFIOWA SPEND A HALF A BILLION DOLLARS OVER THE NEXT FIVE YEARS BUYING GROWTH.  WHAT THAT CALLS FOR, IS TO PAY OUT YOUR MONEY TO GET BUSINESSES TO MOVE TO IOWA.  IT WILL ALSO LIKELY MEAN TARGETING PEOPLE WITH THE SKILLS THESE BUSINESSES NEED FOR NEW TAX CREDITS, OR TAX REDUCTIONS.
NOTHING, IN OUR CURRENT CIRCUMSTANCE AND WITH OUR IMPRESSIVE ADVANTAGES OVER NEIGHBORING STATES, WOULD MAKE LESS SENSE, OR WASTE MORE OF OUR LIMITED RESOURCES.

IF WE DISCOUNT SHARPLY, NOW, THEN THE BUSINESSES WILL COME AND THE SKILLED WORKERS WILL FOLLOW BECAUSE THERE WILL BE JOBS FOR THEM, AND LOW TAXES, TOO.  HAS ANYONE ELSE BEEN TO ARIZONA, OR CALIFORNIA, ETC., AND HEARD FORMER IOWANS SAY THAT THEY'D BE INTERESTED IN MOVING BACK TO IOWA FOR A VARIETY OF REASONS, BUT THAT THEY DON'T BECAUSE THE HIGH TAXES WOULD
IMPACT THEIR STANDARD OF LIVING?  IF SMOKERS ARE CROSSING OVER INTO IOWA TO SHOP FOR CIGARETTES BECAUSE OUR TAXES ON THEM ARE SIGNIFICANTLY LOWER THAN THE TAXES IN SURROUNDING STATES, THEN IT ALSO MAKES SENSE THAT BUSINESSES AND SKILLED WORKERS WOULD MOVE HERE IF WE HAD LOW TAXES AND HIGH PAYING JOBS.
 
IT IS WHEN EVERY STATE AROUND YOU HAS HIGH TAXES, LIKE IOWA, THAT WE CAN DISCOUNT OUR RATES AND TAKE PEOPLE AND BUSINESSES AWAY FROM NEBRASKA AND ILLINOIS, IN PARTICULAR.  IF THE SITUATION WAS REVERSED AND EVERY STATE'S
TAXES WERE ALREADY LOW, THEN YOU'D HAVE TO GO OUT AND BUY THE GROWTH.  BUT BY BUYING GROWTH, AS VILSACK SUGGESTED, ALL YOU'RE LIKELY TO GET IS A BUNCH OF MONEY GRUBBING ENTERPRISES IN HERE WHO WILL BE GONE WHEN THE
MONEY RUNS OUT IN FIVE YEARS.
 
WORSE YET, IF INDIVIDUAL AND CORPORATE TAXES AREN'T DISCOUNTED SHARPLY, IOWA WILL RUN LARGE DEFICITS TO SUPPORT THIS PROGRAM, AND WILL BE NO MORE ATTRACTIVE TO THE TAXPAYERS AND BUSINESSES IN SURROUNDING STATES IN FIVE
YEARS, THAN WE'VE BEEN UP TO NOW.
 
THE BEST APPROACH IS TO DISCOUNT SHARPLY AND TO USE IOWA'S RESTRICTED FUNDS TO REDUCE THE DEFICITS THAT THE STATE WOULD OTHERWISE RUN.  DOING IT THIS WAY WILL AVOID THE BILLION DOLLAR-PLUS DEFICITS THAT WOULD CAUSE THE MAJORITY OF PEOPLE, INCLUDING LEGISLATORS, TO GET COLD FEET DURING THE PROCESS. THE IDEA IS TO STRENGTHEN EVERYONE'S RESOLVE AS WE DISCOUNT OUR TAXES AND BECOME MORE COMPETITIVE.  IF THE DEFICITS NEVER GET VERY LARGE, THEN THE VAST MAJORITY OF IOWANS WON'T FEEL AS THOUGH THEIR LEGISLATORS ARE GAMBLING WITH THEIR FUTURES, AND THEY'LL BE MORE LIKELY TO SEE THE
PROCESS THROUGH TO ITS REWARDING CONCLUSION.

ON THE OTHER HAND, AND VERY FRIGHTENINGLY, IF WE TRY TO BUY GROWTH AND BUSINESSES RESPOND WHILE WE'RE HANDING OUT ALL THE MONEY, THE TEMPORARY MIGRATION WILL LOOK VERY SUCCESSFUL BECAUSE OF ALL THE NEW NAMES AND FACES
IN THE STATE.  BUT THERE WILL BE A VERY BITTER HARVEST WHEN IOWA'S FUNDS ARE GONE, ESPECIALLY IF WE HAVEN'T DISCOUNTED OUR TAXES AND ANOTHER STATE HAS.

EVEN BEFORE WE TALK ABOUT SPENDING A HALF BILLION DOLLARS BUYING GROWTH, WE STILL HAVE A LONG WAY TO GO TO GET OUR DISCOUNTS.  AFTER ALL , THE GOVERNOR PROPOSED A POSTCARD-SIZED FORM FOR FILING TAXES.  HE HASN'T SAID ANYTHING YET ABOUT A TAX RATE THAT WILL BE AS SMALL AS HIS NEW FORM.  AND THAT'S CRITICAL.

SUPPOSE WE DO THIS RIGHT THE FIRST TIME AND WE GET THE OPTION, (YOU'LL STILL BE ABLE TO FILE WITH ALL YOUR DEDUCTIONS IF THAT METHOD SAVES YOU MORE MONEY), OF A DISCOUNT ON EARNED INCOME AT 1.5-2.0% FOR BOTH INDIVIDUALS AND CORPORATIONS.  WHAT HAPPENS NEXT?  THEN THIS TRANSITION SHOULD PROCEED  BY USING ONLY $5-10 MILLION PER YEAR TO ADVERTISE OUR
DISCOUNTED TAX SYSTEM IN IOWA AND SURROUNDING STATES.

WE'LL WANT TO ADVERTISE IN IOWA TO RETAIN THE YOUNG, WELL TRAINED PEOPLE TO STAFF THE KINDS OF BUSINESSES WITH HIGH-PAYING JOBS THAT WE NEED TO ATTRACT.  BUT WE'LL ALSO WANT TO KEEP THE SENIOR CITIZENS HERE, WHO ARE SO IMPORTANT TO US.  BY ADVERTISING THAT IOWA WILL GIVE YOU A DEEP DISCOUNT ON YOUR EARNED INCOME OF 1.5-2%, AND  0% ON INTEREST INCOME,  0% ON
DIVIDENDS,  0% ON PENSION AND SOCIAL SECURITY INCOME, AND, JUST LIKE BILL CLINTON DID FOR HOMEOWNERS,  0% ON CAPITAL GAINS, THOSE PEOPLE WON'T WANT TO LEAVE.

BY ADVERTISING OUTSIDE IOWA, WE CAN REACH INDIVIDUALS AND BUSINESSES WITH OUR MESSAGE ABOUT DISCOUNTING WHO ARE ALREADY INTENT ON FINDING AN ALTERNATIVE TO THE HIGH TAXES THEY PAY, AND THE TAX INCREASES WITH WHICH THEY'RE BEING THREATENED.  ANY OPPORTUNITY FOR RELIEF WILL GET THEIR ATTENTION.

IN SUMMARY, WE CAN MAKE PAYING TAXES IN IOWA JUST LIKE BUYING A NEW CAR: EVERYONE GETS A DISCOUNT ON THEIR EARNED INCOME AND THEN PAYS 0% ON INTEREST INCOME, 0% ON DIVIDENDS, 0% ON PENSIONS AND SOCIAL SECURITY, AND 0% ON CAPITAL GAINS.  IF WE DO THIS, AND USE THE RESTRICTED FUNDS TO KEEP THE DEFICITS DOWN DURING THE TRANSITION, NO ONE WILL GET COLD FEET,
THREATENING THE ECONOMIC GROWTH THAT IS OURS FOR THE TAKING.  THIS APPROACH WILL ALSO MEAN THAT OUR DEPARTMENT OF ECONOMIC DEVELOPMENT WILL BE BUSY HELPING NEW BUSINESSES RELOCATE TO IOWA INSTEAD OF BLINDLY HANDING
OUT  THE LAST OF IOWA'S PRECIOUS RESOURCES.

REMEMBER: THIS IS NOT ABOUT BEING A DEMOCRAT OR A REPUBLICAN ON THIS CRITICAL ISSUE.  EVERYONE KNOWS THAT WE HAVE TO WORK TOGETHER TO TAKE ADVANTAGE OF THIS INCREDIBLE OPPORTUNITY.  WE CAN PUT MORE MONEY IN OUR POCKETS, IMMEDIATELY, WATCH OUR PROPERTY VALUES RISE AND SOLVE IOWA'S REVENUE PROBLEM AT THE SAME TIME.

SUPPORT DISCOUNTING. BE AN IOWAN TODAY!