IPP: Minimum Wage And Business Taxes

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Once again, our friends at Iowa Policy Project come to controversies with those nasty little things called facts. Not sure if they meant for this to happen, but they published two guest opinions in local papers that took a couple of old business pushed chestnuts out for examination and found them wanting.

In one Heather Gibney examines Iowa’s low minimum wage and the arguments for it and argues that they simply don’t hold water. In a paragraph that really hits home Gibney states:

“If you want to make a philosophical case against the minimum wage, go ahead, but it won’t feed families. And, despite the scare tactics about effects on job numbers, good research by the Center for Economic and Policy Research has examined the most rigorous economic research over the last two decades on the impact of minimum wage increases on employment and found no effect.”

A few days later Peter Fisher comes along to do battle with the long pushed concept that Iowa has a bad business climate. This concept has been leveraged by business lobbyists to try to leverage business favored legislation over decades. Here Fisher takes this idea to task and finds it quite wanting:

“So where does this “terrible tax climate” notion come from? The basis for it is a Rube Goldberg contraption built by the Tax Foundation called the State Business Tax Climate Index. It is a mishmash of 118 tax features, selected to emphasize progressivity. These various measures are weighted arbitrarily and combined into a single number for the index.

This number has no real meaning. It produces wacky results because it gives great weight to some minor tax features (such as the number of tax brackets) while leaving out completely two things that have a huge impact on corporate income taxes in Iowa: single sales factor, and federal deductibility.

Only by ignoring the important factors can the authors conclude that Iowa’s corporate income tax ranks 49th. Supposedly only one state has a worse tax. Yet the Iowa corporate tax per capita amounts to only half what it does in the average state, and the tax actually paid by business is among the lowest in the country. The authors’ own charts show that corporations are taxed quite lightly here.”

As always I invite you to keep up on IPP’s well thought out take on issues important to Iowans, especially their pocketbooks. Stop in here a couple times a week to see what is happening

About Dave Bradley

retired in West Liberty
This entry was posted in Economy, Fiscal Crisis, Iowa Policy Project, Jobs, minimum wage and tagged . Bookmark the permalink.