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Friday, March 6, 2020

Government's Moneyball is a Taxing Game

Did you expect the usual stories that come out of spring training would include talk about taxes?  We didn’t either. But a recent article from the sports page in Minneapolis illustrates how high taxes impact where people live – even baseball players.

Minnesota Twins prospect Royce Lewis explained his decision to move from California to Texas. One of the reasons was because Texas doesn't have a state income tax and Lewis had a $6.725 million signing bonus.

“I didn’t really know about taxes. Then my W-2 came in from the contract I signed, and I was like, ‘Yeah, I need to go.’ ” 

- Royce Lewis

It's not just athletes who consider their tax bill when relocating. For over a decade, Rich States, Poor States has shown states with lower taxes, specifically low income taxes, have had more people move into their state than states with high income taxes.

U.S. Census Bureau data shows in 2018, Iowa:

Gained residents from states with higher taxes:
  • Illinois: net gain of 7,772
  • California: net gain of 1,974
  • Minnesota: net gain of 1,660
Lost citizens to states with no income tax:
  • Florida: net loss of 1,607
  • South Dakota: net loss of 2,434
  • Texas: net loss of 2,979 
People move for many reasons, but the amount of money state government takes from taxpayers plays a part.

Iowa is in competition with the rest of the country, especially our Midwestern neighbors, to attract and retain people and businesses. Taxes matter, and the best way to improve Iowa’s tax code is to cut income tax rates.

What's Happening at the Capitol?

This week, a Senate subcommittee heard public comment on the Governor's comprehensive tax reform plan. ITR Policy Director Victoria Sinclair told subcommittee members, "We applaud this effort to thoughtfully reduce Iowa's tax burden and drastically increase the competitive nature of Iowa's tax code on a national level."

The Iowa Capital Dispatch reported:
The Republican chairman of the Senate’s tax-writing Ways and Means Committee, Sen. Jake Chapman of Adel, said there may be a second subcommittee meeting.  He noted that some groups raised concerns but noted, “Overall, it appears the stakeholders are very supportive of what the governor proposed.”

That doesn’t change the fact that many Republican lawmakers have issues with the bill, he agreed.  “Our caucus has made it very clear that we want to see deep tax cuts,” he said. “… But we also recognize that these aren’t just priorities of the governor, these are priorities of Iowans.”
According to a poll conducted on behalf of ITR a few weeks ago, 51.8 percent of Iowans were in favor of tax reform similar to what Governor Reynolds has proposed, while only 32.5 percent opposed.
State government spending is the heart of tax policy. Based on revenue projections, Iowa's General Fund budget will have $235 million more dollars available for the next fiscal year. The more that is spent, the less that is available for tax relief.

This week, a major part of Iowa's budget was approved by legislators: K-12 education funding will increase 2.3%, or $100 million, next year.  

According to TEF Iowa, over 70 percent of Iowa's budget is consumed by education and Medicaid spending. The remaining dollars are fought for by noisy special interest groups and their lobbyists. 

ITR is one of the few groups in the lobby fighting for you to keep more money in your bank account, not government coffers.

We support legislation that will either lower your tax bill, control spending growth, or otherwise increase economic freedom. Here are bills ITR has registered for or against this year that are still alive: 

Legislative activity this week:
  • Governor's comprehensive tax reform bill - SSB 3116/HSB 657
  • Stopping Medicaid recipient fraud - SF 2272
  • Occupational licensing reform (2) - SF 2392 and SF 2393
  • Eliminating the welfare cliff - HF 2424
  • Limiting noneconomic damages against health care providers - SF 2338
No action taken this week:
  • Inheritance tax elimination - SF 307
  • Spending limitation amendment - SJR 20
  • Income tax supermajority amendment - SJR 22
  • Occupational licensing reform - HF 2470
  • Taxpayer-funded lobbyist transparency - SF 2395
  • Motor vehicle mileage tax pilot program - SF 2107 (ITR opposes)
Take a look at our Legislative Update page for more details on and links to these bills. 

Complaining is Easy
 But Advocacy is Effective 

Legislators are casting votes that will determine how much you pay in taxes. Be an advocate. Attend your legislators' local forums and speak up. 
If you can't attend a forum, click here to easily send them an email. We've done the work of looking up their email addresses. All you need to do is write your message and click send!

Previous ITR Watchdog Updates

February 28 - Changing America with good ideas

February 21 - Government wants to ride in your car

February 14 - Unnecessary and excessive

February 07 - Illegal haircut for Super Bowl MVP?
It’s easy for politicians to yield to noisy special interest groups when the taxpayer keeps quietly paying the bills.
Copyright © 2020 Iowans for Tax Relief, All rights reserved.

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