by Steven Waechter | Jun 3, 2013
Well, another class of high school graduates are killing time until they begin their college experience. In four, five, or six years, many of them will graduate from college, and move to Dallas County so they can work as temps at Wells Fargo.
Meanwhile, town squares across Iowa are emptying out. I’ve spent some time exploring small towns in rural Iowa, and there are common threads that threaten to further damage the prospects of the young, and may even threaten the existence of many towns across the state.
And so it goes; young people leave to try and buy jobs that don’t matter (and often don’t exist in large numbers), buildings stand unused, and eventually the towns just collapse into stagnant malaise.
What Muscatine Has To Say
Muscatine is a unique town; the downtown fell into disuse as businesses moved to the ring road, but Muscatine kept some relatively large manufacturing and agribusiness installations, as well as banking and insurance industries. This meant that there was cheap, unused store space downtown, and a population with enough disposable income to support a restaurant culture which is unique in my experience.
Italian, Mexican, and Korean (called the Yakky Shack, it was a personal favorite of mine) can be on the menu for any given meal. Avenue Subs, just around the block from my former law office, is truly unique. Their sandwiches cost more than the chain sandwich restaurants, but the place was always busy at lunch time.
If you can re-create their menu reasonably well, you could open up in any mid-sized Iowa town and I’d bet you would do very well – if you can keep start-up costs down.
What Can Communities Do?
I am often accused of “having no answers,†and “being negative and critical,†and “being mean.†Well, I am an intensely unpleasant person in many ways, pessimism is the lubricant of victory, and I don’t believe in the government’s ability to solve social or economic problems – which translates into “having no answers†when you live in a society enamored by Statism.
In towns and counties across the state there are established businesses, and many of them have working relationships with chambers of commerce or local economic development corporations.
Some of these business interests and organizations have either direct control of vacant retail space or contacts with property owners with retail, warehouse or light-industrial space to offer but with no available takers.
So, how about a community-level angel investor network? Why don’t we put young entrepreneurs together with established business owners or property owners to help them raise start-up capital – cash, space, or equipment – for their own small businesses.
What businesses? That’s the beauty of it – I don’t know. I think the sandwich shop idea would work well in any town of about 5,000 + people, especially if you can get space within walking distance of the largest employer in town, the school, or the college.
Maybe internet commerce, custom clothing, fresh foods, computer game design, who knows.
But, College is Important for Jobs Skills…..
No, it is not. The idea that your young go-getter will be more entrepreneurial after spending half a decade with tenured academics is laughable. If you need to learn accounting, take accounting at community college part-time for a fraction of the cost.
Why can’t Iowa become the youth start-up capital of the country? Why must we continue to shuffle the young and the (presumably) ambitious into expensive colleges only to graduate with the pressure of debt and depleted financial resources pushing them towards the work-a-day life that could disappear in the next round of layoffs?
I’m Just a Lawyer, but…
Now, I am perfectly willing to admit that I am not the exemplar of my own advice – think of me as the desert hermit the protagonist seeks out for guidance. That is probably why I was attracted to the law, and most of my legal career has involved debtor-creditor law, so I know how debt can screw up a life or a business venture.
This is how the Chamber of Commerce can help. They can assemble angel investors with cash, equipment, or space available. They can arrange discounts for accounting and legal services for things like taxation and payroll. They can send experienced businesspeople into the schools to speak on business creation, promote self-employment, and whatever else they can think of to encourage young Iowans to consider independent livelihoods without the need for debt financing.
If you fail, then start over with a different idea. If you succeed, then you owe me lunch.
by Steven Waechter | May 3, 2013
Having nothing better to do, I decided to spend Monday morning on the DMACC campus for a spring career fair. I wanted to wander around and ask questions to people to try and gauge their perception of the job market, but I had no intention of simply administering a poll. No, I was going to make people defend their statements by asking why they held that belief, like Socrates but without the profoundness.
I asked jobseekers if they were feeling optimistic or pessimistic. I asked recruiters about what kind of people they are looking for, both in terms of skills and personality.
Optimistic, They Think
Personally, I believe that optimism is stupid and should be hated, but I appear to be alone in this sentiment. Not one person admitted feeling pessimistic when asked directly, but when asked why they felt optimistic the responses were not very convincing. Most of them professed to be “upbeat†people, none of them based their professed optimism on confidence in finding employment.
One guy challenged me to explain how a person could get out of bed without being optimistic; I explained that getting out of bed has more to do with an urgent need for urination than a sunny disposition.
With only minimal coaxing I got a number of people to divulge some worries they held about finding work that paid sufficient wages to get on with their lives. This was the sentiment from some cosmetologists and a video store clerk who found my line of questioning strange but entertaining.
One young lady had experience in call center collections. I always wondered what people with lip rings ended up doing for a living, and now I know.
One quite profound comment I received was from a jobseeker who was leaving when I spoke to him. He was feeling pretty good about the day, and explained that it was because he actually got to speak with real-life people about getting a job, which is a novelty in a world where everything is now done online.
What the Recruiters Had to Say
Not just wanting to badger the jobseekers, as lunch approached and the crowd thinned out I began focusing on the recruiters – I was willing to be obnoxious but did not want to be disruptive, so waiting until the recruiters had nothing to do seemed like the polite way to go about things.
I asked the recruiters about what kind of people they are looking for, both in terms of job skills and personality.
In terms of available jobs, IT professionals, nursing at all levels, and financial advisors appear to be in growing demand in Iowa; I would speculate that this is due to the aging population needing health care and financial services in greater numbers.
Sales positions were a bit harder to come by, warehousing and light manufacturing appear to be evening out, and accounting positions are open but require some specific knowledge of one area of accounting, which could make job hunting difficult for some of the accounting professionals.
Type-A personalities
I spoke at some length with a recruiter about what sort of personality her company seeks. Her comments boiled down to “a networking, outgoing, team player with a Type A personality.†It sounded to me that everyone needs to be a sales rep even if they aren’t a sales rep. She agreed with that sentiment.
Sorting personalities is largely bull wash, but there are clear differences between people who prefer boisterous activity to pensive reflection. I vaguely remember going to some sort of leadership conference in college where we were sorted into Blue, Orange, Gold and Green personalities. I don’t remember the test, but I do remember being in the smallest group.
I ran the Introvert-Extrovert angle by some other recruiters. They all agreed with the first recruiter, which I found annoying because I am the more pensive, less diplomatic, scowling type who prefers libraries to call centers – “an atmosphere as restful as an undiscovered tomb,†as Professor Henry Higgins put it.
The National Career Readiness Certificate Strikes Again
Iowa Workforce Development was there to push the NCRC, which I didn’t expect although it didn’t surprise me. The NCRC is being rolled out through the Skilled Iowa Initiative under the supervision of the Lieutenant Governor.
The effort is two-pronged, in that they must convince people to take the test, as well as convince employers to value the results in their hiring efforts – not to mention informing employers that the NCRC is a thing that exists, because most of them still don’t.
Final Thoughts
Perhaps the whole thing was absolutely pointless. Maybe all I did was waste time, irritate many, and perhaps amuse a few people who aren’t used to being accosted by a random guy asking inane questions, but I encourage all of you to try it sometime because it is sort of fun.
The people I spoke with seemed intelligent, capable people who were eager to work. The recruiters seemed happy to speak to me as well as to jobseekers. Whether it will translate into actual people obtaining actual jobs, I may never know.
Nobody seemed terribly confident. People professed to be optimistic but didn’t know why, recruiters thought people should be optimistic but couldn’t explain why, and the various workforce organizations thought that they had the answers – new tests, new skills, and new strategies – but couldn’t explain why these medicines would work in the actual economy.
I left more convinced than ever of one thing; the American economy doesn’t work for a large number of people. In such an economy, the only real opportunities are the ones you make yourself. There was a time when most Americans had independent livelihoods, and I think it is time to re-examine self-employment.
Despite what you hear from politicians, the government hates self-sufficient people – they are too difficult to tax. It is much easier to tax a Bud Fox (Wall Street) than a Charles Ingalls (Little House on the Prairie,) which explains so much about our nation if you stop and about it.
We need as many people as possible to be as independent as possible from the mainstream economy; not just independent from government support, but people who don’t need to work for others to earn a living. In such a world, the career fair becomes absurd as a concept, not just made absurd by a little Socratic questioning.
by | Apr 23, 2013
Despite both Parties rhetoric to the contrary, I am hearing the chances of any significant Commercial Tax Reform in Iowa is dwindling.
Though legislation has passed each chamber, the Conference Committee tasked with finding a compromise both sides are comfortable with will struggle mightily. This is largely due to the fact that the structure for reforming the tax code that passed by each chamber are not compatible with each other. While Senate Democrats are insisting on a tax credit formula which businesses apply for and are granted, the House Republicans and the Governor want changes to the percentage assessed values are taxed at as well as lower caps on local property taxes.
I highly doubt that either side will give much on their chosen structure for reform, and it is hard to imagine a combination of these approaches being melded together without a confusing mess being created. Additionally, as desperate as Republicans are to deliver lower taxes to their constituents, there is a feeling in the caucus that passing a half-measure now will make it harder to re-visit the issue in future sessions to achieve their true goal. Conversely, Democrats would not mind getting their tax credit approached passed and fighting future battles with Republicans on increasing the value of the credits as they come up.
The Big Picture
After essentially controlling Iowa government for years with only a Senate majority, I don’t see anyway that House Republicans and Gov. Branstad can cave and allow Democrats to dictate the structure of tax reform–the one issue Republicans unquestionably own over Democrats.
As I’ve said here before, I do believe that Sen. Gronstal has a stronger hand than many realize. Much like the Fiscal Cliff debate late last year where Congressional Republicans were forced to give in, Iowa Republicans are in the same tough position of seeing taxes rise if nothing is done. This fact transfers a significant amount of leverage to Senate Democrats and Sen. Gronstal is operating accordingly. As long as Senate Democrats perceive they can hold a majority while taxes rise this is the posture that Republicans will face. Looking long term, if Republicans are unable to extract major compromises from Democrats in the conference Committee–which I don’t expect–I am comfortable with once again waiting on a bill altogether.
Though it will be harder than in 2012 and is far from a given, with Branstad on the ballot in 2014 there is a shot at winning the Senate and a likelihood of holding the House. If a bill was done with Republicans holding both chambers and the Governors office clearly the dollar amount and scope of tax relief be much larger. Perhaps more importantly there would also be a significant flat tax component and an opportunity to end the system of automatic future tax increases we have now. The leverage that would be gained in future partisan tax scuffles by doing so would be worth it’s weight in gold.
Research and House Majority Leader Statement
The main bill in focus can be read here (SF 295)…and by the way I dare anyone to read this bill and tell me we can’t find a better way to write tax policy. In contrast, here is the Dix/Whitver optional Flat Tax bill offered earlier this session (SF 443). Should this approach to our taxes be taken most citizens interaction with the tax code could be limited to lines 1-35 of this bill. A welcome thought to a large majority regardless of Party.
Below is the full release from House Majority Leader Linda Upmyer regarding this topic:
Delivering significant property tax relief to the hardworking taxpayers of Iowa has been one of our top priorities since gaining the Majority three years ago. Each year we have passed numerous proposals to the Senate, but unfortunately have not been able to reach a consensus. I am optimistic that this will be the year for true reform.
This week the House passed a comprehensive tax relief proposal that provides significant property tax relief across Iowa and helps reduce Iowans’ income taxes. The bill, SF 295, does not shift the tax burden between classes of property, but instead ensures that relief and reform is permanent, predictable, meaningful, and affects all classes of property. If no action is taken on property tax relief, Iowa’s taxpayers are staring down the barrel of a $2.6 billion property tax increase over the next 10 years, with the majority of that falling to homeowners.
Under our current state tax structure, residential property taxpayers pay approximately half of Iowa’s property taxes. While our proposal provides property tax relief across all classes of property, residential property taxpayers would benefit the most under this plan.
Currently, in terms of K-12 school funding, the state covers 87.5% of the school foundation formula. The remaining amount needed for our schools to operate falls on the backs of local property taxpayers. Our proposal increases the amount of state aid going to our schools and decreases the reliance on local property taxes. As a result, local property taxpayers will be protected from future tax increases.
Our proposal would also implement a 20 percent rollback of taxable value on commercial and industrial property, which would occur over a period of four years, at five percent each year. This would provide approximately $339 million in property tax relief when fully implemented. Additionally, our plan would include a standing unlimited appropriation to backfill lost revenue from the rollback to local governments.
As previously mentioned, the bill also aims to reduce Iowans’ income taxes by giving individuals a choice to file under the current system or to use a 4.5 percent flat tax option. This legislation makes Iowa’s tax system simpler, flatter, and fairer. Under this proposal, each taxpayer is given a choice that will enable them to do what makes the most sense for their own household budget.
Finally, our proposal would send dollars back to Iowa taxpayers that have been collected in the Taxpayer Trust Fund. Only after the Legislature and Governor have agreed to a final budget that meets the priorities of Iowans and funds the state’s obligations, any excess revenue would be returned to Iowa’s hardworking taxpayers.
SF 295 passed the House with bipartisan support and was sent back to the Senate for their consideration. We look forward to continuing this discussion, listening to all ideas and proposals, and are hopeful a resolution will soon be reached that provides much-needed and real tax relief to all Iowans.
by | Jan 8, 2013
One of the top three priorities for the upcoming legislative session will be finally putting something on the books to bring Iowa’s commercial property tax rate in line with the rest of the nation. After much angling by both sides last year, ultimately no adjustments were made to the tax code.
Below you will find a very brief recap and analysis of the three plans that were on the table last year.  They are important to know since past will certainly be prologue in this debate. Both sides are essentially pushing the same proposed solutions as they did a year ago—and one way or another the law will reflect whichever side wins on the issue.
Governor Branstad’s Plan (House Study Bill 519)
This plan would reduce the taxable value of Commercial and Industrial property by 5% a year for 8 consecutive years. The taxable value for these properties is currently at 100%, so in 8 years the plan would allow the State to collect on 60% of the valuation instead of the current 100%.
- The cap for increasing valuations on Residential and Ag properties would be lowered from the current 4% a year to 2% a year.
- The first 3 years of the 5% reduction in valuation would be guaranteed, with the additional 5 years of the 5% reduction being subject to the value of commercial property rising in its assessed value.
- To offset the lower revenue being brought in by local governments the State would pay cities money every year. $50 million in year one, $100 million in year two, $150 million in year three. After the third year the amount would be raised an additional $30 million per year until it got to a $240 million backfill. This backfill would then remain on the State’s books every year going forward.
- The proposed money to local governments would be administered in different amounts based on how much a local government was affected by the revenue loss.
Analysis—This, much like the Governor’s education reform, would essentially be an increase in power and control at the State government level. The positive is that, in theory, the local governments would be forced to cut spending as the backfilled money that they receive is projected to be less than the revenue loss experienced by the local governments. In the prior incarnation of this plan the “administered based on need†language was not included, so it is quite possible that the backfill sent to the local governments would in fact not require them to actually cut their budgets—it really would just depend on how different the property valuations were from city to city.
The House Republican Plan (House Study Bill 500)
In many ways this plan has a lot of the same principals as the Governor’s plan. One major differences is that it implements in 14 years instead of 8 (interestingly the House’s prior proposal called for the 8 years that the Governor has now adopted).
- The biggest difference is that instead of paying local governments to offset the revenue loss, this plan would eliminate the 12.5% “2nd effort levy†(and I believe the $5.40 per $1,000 taxable valuation known as the “uniform levyâ€) and instead, by the year 2019, would have the State fund 100% of the per-pupil cost of K-12 education. Note: Right now the uniform levy is taken from property owners statewide and the State pays to take that amount up to 87.5% of each years determined per-pupil cost—the remaining 12.5% is paid by local property taxes taken from inside each district.
Analysis—There are smaller components to this that I did not investigate fully, but in many ways this approach is the same as the Governor’s in that it limits the local governments taxing authority. While the Governor’s plan would take general fund money and give it to the locals, the House plan just takes the responsibility of paying for things that the locals would otherwise have to spend on with local property tax funds (mainly education). Also, like the Governor’s plan, it would not fully offset the drop in local government revenues and theoretically would force local entities to cut the size of their budgets.
Though “local control” is usually a Republican battle cry, in this case it is largely a Democrat argument against the Republican plans. I happen to find the criticism valid—but for different reasons. The Democrats oppose the taking of local control because it would limit the amount that taxes can be raised, I see it more as limiting the decision making of local communities to pursue what their residents think is best (within the broader State law). One of the unresolved issues I have here is how the State paying all of the education funds would play out in terms of funding each school district. I believe the current formula allows a discrepancy range of a $175 per-student from district to district but, given the fact that the State would fund 100% of the burden, the questions exist—would this remain and how so?.
The Senate Plan (SF 522)
This bill passed the Senate last year 46-4. The only 4 to vote against it were Republicans Chelgren, Dix, Whitver, and Sorenson.
- It would tax the first $30,000 of commercial property at the same rate of residential property. This would result in an estimated $555 to $714 reduction for typical Commercial taxpayers (this small amount is one of the reasons that the four Republicans listed above voted against it).
- The plan would top out at a reduction of $6,856 (paltry when you consider that large retailers routinely pay over $500,000 a year in property taxes).
- The biggest distinction from the other plans is that the savings contained in the bill would not be concrete, but instead would be tied to the total revenue amount brought in by the State. Tax relief would only fully materialize as long as the States revenue increased.
- The plan basically offers a $50 million reduction in Commercial property taxes per year, as long as the States revenue increased 4% in that year.
Analysis—In many ways this last bullet point means that it is not really a significant cut in taxes or spending at all, and frankly it’s shocking that only four Republicans voted against it. It has some other provisions that make it, more or less, a way to stop the impending increase in property taxes faced by everyone. The positive here is that it does not affect the local government’s revenue stream or sovereignty (nor does it backfill anything with other State funds). The flip-side is that it does not allow for any reduction in government spending. It basically says that as long as the economy is good and values of property increase we will agree to give you a tax credit to soften the burden of your taxes rising along with the value of your Commercial property.
Stating the obvious here—this proposal is totally insufficient to deal with the size of the problem. What makes this plan ridiculous is that one of the major advantages in a tax reform plan is that businesses will know that lower rates are solidly in place for future spending and hiring. By having a bulk of the tax savings tied to the amount the State brings in in a given year, you are in essence not able to tell a business owner what his rate will be going forward—and clearly uncertainty is a killer for business owners
Overview & Summary
All these plans seems somewhat flawed and I don’t endorse any of them on their merit. Since Democrat votes are needed to pass something, if I had to I would support the House plan. My strong belief is that all three are unnecessarily over-complicated. More than anything they are just moving money around and telling local governments that they can’t raise taxes beyond a certain point—how much you want to bet that this doesn’t stop the same legislature from mandating that the same municipalities do more things every year?
Ultimately my skepticism comes from the fact that these proposals are all about people paying less taxes without putting forth a dollar of specific spending cuts…funny how that works.
by | Nov 23, 2012
Below is a brief overview of a bi-partisan initiative that is set to be brought to the floor of the Iowa Legislature when it gavels in next session. Once it is brought to the floor I will publish a more detailed look at it. As noted on Wednesday, Sen. Brad Zaun, Rep. Ako Abdul-Samad, and Rep. Kevin Koester have already signed on to support the measure and it will be interesting to see the reaction from both sides once the session starts.
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The Every Iowan Economic Empowerment Act or The Empowerment Act takes advantage of our state’s strengths in two ways.
I. Rewarding Hard Work & Sacrifice Provision
The first component of The Empowerment Act rewards the hard work and sacrifice of Iowans by eliminating taxation on overtime.
A. If an Iowan works an hourly or hourly jobs, after 40 hours state taxation ends. No hour worked over 40 hours is taxed whether that time is accrued at one job or a second or third job.
B. If an Iowan works a salaried position that consists of at least 40 hours per week as their primary job but works a second job that is either hourly or salaried that secondary employment will not be taxed by the state.
C. In a state with the highest per capita number of two working parent households, this rewards their sacrifice by allowing them as a household to keep more of the money they earn or allows one of the two to work less hours while the household brings home the same size weekly paycheck.
II. Capitalism & Working Class Iowa Empowerment Provision
The second component of The Empowerment Act returns to Iowans the ability to invest in and rebuild their communities while savaging rampant cronyism found in state and local gifting politics.
A. 5% Charitable Provision Each working Iowan gets 5% rebated from their individual state income tax bill and they can designate the non-profit organization or organizations of their choice to receive those funds.
B. 10% Rural Revitalization Provision Each working Iowan gets 10% rebated from their individual state income tax bill and they can designate the rural enterprise or enterprises of their choice to receive those funds.
C. 15% Entrepreneurship & Capitalist Empowerment Provision Each working Iowan gets 15% rebated from their individual state income tax bill and they can invest in any Iowa based business venture.
Implementation
1. Potential recipients for investment sign up as state vendors and provide relevant information such as their EIN, business organization charter, and banking information.
2. At tax refund time the state wires invested funds to the appropriate vendor not the taxpayer.
3. The taxpayer is responsible for vetting the investee and any collaborative efforts.
4. Demonstrable fraud is prosecuted as it would be under our current code.
