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Friday, March 26, 2020

Brady Keeping His Distance – From Taxes

In a normal springtime without a pandemic, some of us would be talking with friends and co-workers about:
  • March Madness
  • Major League Baseball opening day
  • Iowa Hawkeye Wrestling winning a national championship (they were the favorites to win it all this year)
Now though, perhaps the most prominent sports story is NFL quarterback Tom Brady signing with a new team. Brady left his long-time home as a New England Patriot and signed with the Tampa Bay Buccaneers.

It has been reported that the Buccaneers and Los Angeles Chargers both presented identical $60 million offers to the quarterback.

Whatever reasons Brady had for leaving the Patriots organization, taxes might have impacted his decision to sign with Tampa Bay. Massachusetts has a flat income tax of 5.05%, California has a top rate of 13.3%, while the state of Florida does not impose any income tax.

Signing with a team in Florida instead of California may save Brady an estimated $8 million over the life of his contract. He will, of course, still owe about $19.5 million in federal income taxes, and he will have to pay the so-called “jock tax” for games played in states that do have an income tax.

It’s not just franchise quarterbacks and professional athletes who are making these types of decisions. A few weeks ago, we shared a story of a 
baseball player moving to avoid state income taxes. 

Taxes are a factor that impact where people of all income levels choose to live. Iowa has the 42nd worst tax climate in the country. Our state’s high tax rates make it harder to compete with neighboring states for businesses, jobs, and people.

Policy Prescriptions for Uncertain Times

Communities across the nation are facing many challenges because of the coronavirus pandemic. Along with the heart-wrenching stories, there are stories of innovation and governments using good public policy to lead us out of this crisis. 

Just as a virus can harm physical health, bad policies can make the economic damage worse. If needs increase and resources decrease, the public’s health and safety would suffer as a result.

Iowa needs to respond with prudent, short-term expenditures, prioritizing people and businesses affected by the pandemic, and relaxing government authority to improve the ability to both respond to the current crisis and boost economic recovery.

ITR has prescribed several Dos and Don’ts to get goods and services to people where they need it most (while remaining safe) and still positioning the economy and the state’s finances for the best possible recovery.
  • Do waive or repeal Certificate of Need to increase the number of hospital beds and treatment centers
  • Do promote telemedicine
  • Do cut occupational licensing red tape to allow more health care providers to jump into the fight
  • Do distinguish between emergency and General Fund spending
  • Don't create ongoing financial obligations with one-time funds
  • Don't suspend government transparency requirements
Use the link below for a more extensive explanation on each issue:

Read More: Policy Prescriptions for this Crisis

Iowa is the Perfect Example

A part of Governor Reynolds's Public Health Disaster Emergency was called a "perfect example" of relaxing licensing requirements within our health care system. 

Sarah Curry, Policy Director at Nebraska's Platte Institute, highlighted Governor Reynolds allowing health care professionals to practice medicine if their license expired or lapsed in the last five years. Curry said, "Actions like this are a great way to mitigate the overrun on health care."

Innovations and sensible solutions will help solve this crisis. Good work, Governor! 

Government's Response

In addition to relaxing licensing and regulation requirements for healthcare, Governor Reynolds and the Iowa Legislature have been taking many steps to stem the spread of the coronavirus, protect Iowans, and support businesses. Among these are:
  • Extending tax filing and payment deadlines 
  • Suspending some regulations
  • Easing licensing requirements
Use the link below to see a detailed list of actions taken by state government that impact the issues ITR works on. 

Read More: Iowa's State Government Response

We're All in This Together

Iowa nice shows up in times like these. Little things (and big things) can make an incredible difference when individuals take initiative and work together to make society better.

We have noticed more feel-good stories in the news about Iowans helping neighbors and their communities. Take a look at those we have collected and share some of your own.

Read More: Little Things Make a Big Difference

Questionable Use of TIF in Des Moines

A renovation proposal for the Financial Center in downtown Des Moines puts forth a $59.3 million plan that would convert 13 of the 25 floors into a hotel, as well as add other amenities like a restaurant, coffee shop, and market. 

The City of Des Moines has approved a preliminary TIF plan for this project to the tune of $7.5 million, or 12.7% of the total cost of the project. This building sold as recently as 2014 for $8.87 million. The $7.5 million TIF amount is a substantial amount of money to be rebated back to the developer that could otherwise be available for use on other public projects or to reduce property tax burdens for Des Moines residents and businesses.

Determining if this is the best use of tax dollars is up to residents of the City of Des Moines. Unfortunately, it’s unclear that Des Moines residents were truly able to weigh in on this proposal.

Des Moines City Council members teleconferenced into this meeting, making the meeting essentially entirely virtual, with the exception of a few essential staff who were present in the council chambers. Information for the public to participate in this call via Zoom was made available on the agenda; however, not everyone has access to the internet or technology that would allow them to teleconference.

While the residents of Des Moines may fully support the Des Moines City Council’s actions to pass a preliminary plan that costs millions and pays for 12.7% of proposed renovations to the Financial Center, this decision could have been put on hold until the public had a better opportunity to participate in the process.

Read More About this Issue

The Iowa Capitol is closed to the public, and the legislative session has been suspended through April 15.

At this time, it is impossible to know the coronavirus impact and determine priorities for lawmakers when they come back to the Capitol. You can see the progress of legislation through March 16 by visiting the Legislative Update page on our website.
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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