Tax cuts vs. clean energy

The Midwest, and especially Iowa, has invested in wind and solar power. Both wind and solar are under attack in the new plan.

Much is being written about the effects of the House Republican tax proposal on different states. By excluding or limiting deductions for state taxes, the proposed tax plan favors states with no income tax — which often is the tax most fair to all of a state’s residents.

Another way states will be affected differently is in energy development.

The Midwest, and especially Iowa, has invested in wind and solar power. There is a production tax credit for wind and an investment tax credit for solar. Both wind and solar are under attack in the new plan.

The wind tax credit already is scheduled to phase out over the next five years but the Republican plan would both speed up the date and cut the present amount of the tax credit. Authors of the bill may not succeed because of something obvious to everyone in Congress, and noted in one news report:

“A report released by Morgan Stanley last week said the Senate is unlikely to pass changes to the tax credit, noting that 85 percent of wind projects are in Republican jurisdictions.

“Sen. Chuck Grassley (R-Iowa) issued a statement last week saying he’s working to block the proposed changes. He told reporters last year that he would fight to preserve the PTC, saying President Trump will ‘have to get a bill through Congress, and he’ll do it over my dead body.’”

As someone who ran against Senator Grassley in 1998, I can tell you we agree on this issue. Proponents of the tax plan claim wind has to get a reduced tax benefit so that taxes on business can be cut overall.

Oddly, they do not see the same need to rein in all tax credits for all energy industries. The state of Georgia where a two-unit nuclear plant is way over budget and way late being finished gets the benefit of extending a tax credit for its big utility company. I bet our Senator Grassley will point that out if and when the tax plan gets to the Senate.

The Trump Administration ignores climate change and wants to subsidize coal plants. But now the U.S. House tax plan would add to the problem of warming our atmosphere by helping to cut back on the cleanest, safest, cheapest new energy source.

It turns out the skewing of benefits to the wealthy, clearly evident in this plan, may not be the plan’s only problems.

David Osterberg, founder of the Iowa Policy Project

dosterberg@iowapolicyproject.org

 

Unions overcome unbalanced bargaining law

ALEC-friendly lawmakers, eager to crush public-sector unions, may have instead given them new organizational life.

If Iowa lawmakers thought that their Draconian revisions to Chapter 20 could break the back of public-sector unionism, the last two months have proven them spectacularly wrong. Since early September, almost 500 of Iowa’s public-sector bargaining units have been forced into recertification elections.

Under the new rules, locals had to pay for the election themselves — and then win a majority of the entire bargaining unit (not just the votes cast). AFSCME’s Danny Homan remarked that of those pushing the new restrictions, “not one … could win an election under the rules they gave us.”

As is evident in the returns, public-sector workers have not only dug in their heels against the attack on their rights to bargain, but have begun to push back. ALEC-friendly legislative leaders, so eager to crush public-sector unions and silence their political voice, may have instead given them new organizational life.

Consider some of the numbers from the September and October elections (summarized in the graphic above). Of those voting, almost 98 percent voted to keep the union. In 229 elections, all the votes cast were “yes” votes.

Of the 32 bargaining units (accounting for about 1,000 workers) decertified, only five lost the majority of votes cast; in 21 units, nonvoters — counted as “no” under the new rules — tipped the balance. In six other units, no one voted.

A look at the 32 decertification returns suggests results that are starkly undemocratic: At Broadlawns Medical Center in Des Moines, for example, nurses voted 74-27 to stick with SEIU 199. But, because they needed 99 votes to capture half of the bargaining unit, they lost. In the Iowa Falls Community School District, a Teamsters 238 local voted 27-0 to certify. But because they needed 33 votes to capture half of the bargaining unit, they lost.

As an example of the success of strong organizing in the face of the rules imposed upon workers, Iowa State Education Association locals in 233 locations mobilized for recertification votes — winning 229 of those and losing only four by a total of 15 votes. Even in those four isolated cases, ISEA was favored by a majority of those actually voting — just not enough to satisfy the special restrictions placed on them by lawmakers.

Colin Gordon, senior research consultant to the Iowa Policy Project

cgordonipp@gmail.com

Another reason to support IPERS

How bad might this identity theft case have been for retirees with their IPERS benefits in one of any number of privately managed accounts?

An estimated 103 beneficiaries of the Iowa Public Employees’ Retirement System (IPERS) were recent victims of identity theft — about 0.09 of 1 percent of all retirees receiving IPERS benefits. The system reacted quickly and transparently to support its retirees.

IPERS is cautioning all beneficiaries to make sure their October payments were made properly, and has issued new payments to those affected by this theft, in which criminals used personal information to redirect payments for a group of retirees.

All of this leaves a burning question for 2018: How bad might this have been without the IPERS system looking out for these retirees?

Put another way, what if all 115,000 of IPERS retiree beneficiaries and 350,000 IPERS members overall had been forced to private retirement plans, instead of the traditional pensions they have, as some lawmakers and hard-right activists would do with the future of IPERS?

By early news coverage, IPERS appears to have reacted very quickly to handle this security breach. IPERS had the backs of its beneficiaries, funds recovered and benefits on track to those counting on them, according to these early accounts.

It is unfortunate that this is not the emphasis of such stories. It should be. Identity attacks and threats are commonplace, and how the retiree’s account is protected is a critical issue.

Could you count on the manager of your private retirement account, such as a 401k, to respond so quickly, and with such accountability? Maybe. 

The new story about this identity theft assault on IPERS beneficiaries is one more reason — along with the positive performance of IPERS investments and retirement security offered by the program — to be putting the brakes on any attempt to rush through major changes to IPERS.

Privatization advocates make ideological arguments. In practical terms proposed changes would allow private outfits to profit unnecessarily from comparatively unaccountable management of public workers’ retirement investments, causing extra costs to employees and perhaps to the state.

So-called “reforms” have never been about making retirements more secure for those whom we as taxpayers employ to provide essential public services. This security, not private profit, is fundamental to the purpose and commitment of IPERS.

Mike Owen, executive director of the nonpartisan Iowa Policy Project

mikeowen@iowapolicyproject.org

Tax Foundation’s Waste of Time Index

All of the same problems remain with the Tax Foundation’s unreliable comparison of state business tax “climates.”

Biz-tax rankings unworthy of attention

The Tax Foundation today released its 2018 State Business Tax Climate Index (SBTCI). All the same problems with this unreliable measure remain:

  1. The State Business Tax Climate Index purports to measure a state’s “tax competitiveness” but the index turns out to bear very little relationship to what businesses actually pay in taxes in one state vs. another. Read more.
  2. Scoring well on the SBTCI does not mean a state will experience more growth; the Tax Foundation provides no evidence that its index actually predicts growth and research has generally found that it does not. Read more.
  3. The index is a combination of over 100 components of state tax systems, giving substantial emphasis to some components that cannot plausibly affect tax competitiveness, while ignoring features that have a large impact on business taxes (single-factor apportionment and deduction of federal corporate income taxes). Read more.

The methodology is unchanged from the 2017 edition, with only slight changes in the weights applied to the five sub-indexes and a couple of tweaks to specific taxes that affect a handful of states.

Peter Fisher, research director of the Iowa Policy Project.

pfisher@iowapolicyproject.org

See IPP’s Grading the States website for more insightful analysis of business tax rankings — www.gradingstates.org

About those 10 reasons, Senator …

At stake is health care access for millions, including people with pre-existing conditions. Surely these would be at the top of any list of concerns about Cassidy-Graham.

Senator Chuck Grassley of Iowa has made the point himself: The Cassidy-Graham bill to repeal the Affordable Care Act (ACA) has many deficiencies.

“I could maybe give you 10 reasons why this bill should not be considered,” he told Iowa reporters.

So, let’s look at some of the reasons, on the merits, why people might have concerns about Cassidy-Graham.

  1. People with pre-existing conditions would lose access to health care. Protection of these people assured now under the ACA would be left to state decisions, with states already cash-strapped.
  2. Many who became eligible for coverage through the Medicaid expansion of the ACA would lose it. In Iowa, about 150,000 people gained coverage by this expansion.
  3. It would change Medicaid expansion to a block-grant program that provides states no flexibility to deal with recessions or prescription drug price increases.
  4. Medicaid for seniors, people with disabilities, and families with children would be capped on a per-person basis. Anything higher would be left to the states to provide. There is neither any assurance states would want to do that, or even be financially able to do so.
  5. Iowa would be marched to a $1.8 billion cliff in 2027 under this bill, with federal support dropping sharply. For context, that is the equivalent of about one-fourth of the current state budget.
  6. Millions would lose insurance coverage. While we’re still waiting for the estimate from the Congressional Budget Office, past repeal proposals show this. And, since this bill offers nothing beyond 2027 for the Medicaid expansion, via block grant or otherwise, the prospect of 32 million people losing coverage (as demonstrated in estimates in previous ACA repeal legislation) is very real.

In Iowa? The graph below shows how Iowa’s uninsured population has dropped with the advent of the ACA, or Obamacare. Census data show uninsurance in Iowa dropped by nearly half in just three years, by about 116,000 — from 8.1 percent uninsured in 2013 to 4.3 percent in 2016.

So, this is a good start on why Iowans might be concerned about Cassidy-Graham — a last-ditch effort to rush into law radical changes in the way millions nationally and over 100,000 in Iowa gained access to health care in just three years.

We invite Senator Grassley to add to the list and get us to the full 10 reasons he suggested that might cause concerns about this bill.

Or better yet, maybe together in a deliberative process that involves everyone, we can come up with a list of 10 things that any health care policy should address.

Surely the list would include insuring more people, assuring more with practical access to health care when they need it, improving public health and reducing costs. We invite Senator Grassley to that discussion.

Mike Owen, Executive Director of the  Iowa Policy Project
mikeowen@iowapolicyproject.org

Labor Day 2017: Disappointing trends for Iowa working families

A higher minimum wage, union representation and investments in education produce growth and productivity in local and state economies that tax cuts never deliver.

Editor’s Note: This piece by Colin Gordon, senior research consultant at the Iowa Policy Project, ran as a guest opinion in The Des Moines Register.

Hear Colin Gordon’s Sept. 7 interview on Michael Devine’s “Devine Intervention program on KVFD-AM 1400 Fort Dodge.

Labor Day is always a good time to take stock of the state of working Iowa. Patterns of employment, job creation, and wage and income growth across the Iowa economy are telling — and disappointing.

This long-term economic pattern combines with the most disheartening legislative changes for working families in the lifetimes of most Iowans. The year 2017 poses great challenges to Iowans’ economic security, let alone opportunity for those coming to, serving in or retiring from the job market.

The Iowa Policy Project’s upcoming State of Working Iowa review finds the following:

•   Recovery is elusive. The Great Recession is over, but the national and Iowa economies are still struggling to recover. While Iowa regained its pre-recession threshold of jobs in June 2013, our economy and population have continued to grow — leaving us a jobs deficit of 34,000 jobs as of July.

While the unemployment rate has come back down to a healthy 3.2 percent, the labor force participation rate is still well below its peak and rates of underemployment and long-term unemployment are still higher than they were before the financial crisis hit in 2007.

•   Despite job gains, we have fewer good jobs. Counting jobs lost or added is important, but so is the quality of those jobs. Since the 1970s, Iowa has shed many good jobs in sectors like manufacturing, and replaced too many of them with lower-wage service jobs.

But the real damage has been done by the collapse of security and job quality within sectors and occupations. We have traded good jobs for bad jobs, due to economic shifts, loss of union representation, lax enforcement of labor standards, and alarming growth in contingent work relationships.

•   We are treading water. Wage growth is anemic for all but the highest earners, underscoring both low job quality. In Iowa, the median wage in inflation adjusted dollars inched up less than 1 percent, across the last generation (since 1979).

The constraints on wage growth are mostly political: a weak commitment to full employment, the declining real value of the minimum wage, and loss of voice and bargaining power with the loss of union representation.

•   We are choosing the wrong policies at the wrong time. The last year in state and national politics has only made things worse. The Trump Administration has moved to roll back both the substance and enforcement of key labor standards, and trade, tax, and financial policies have lavished the economy’s rewards on the highest earners. In Iowa, the legislative fusillade of the last session took aim at precisely the policies — including public sector collective bargaining and local minimum wage initiatives — that were helping to contain the damage.

Recent experience across the states offers us a good sense of what works and what doesn’t. A higher minimum wage lifts families out of poverty with no decrease in employment or economic growth. Union representation and collective bargaining offer a robust defense against income inequality and the erosion of job quality. Investments in education produce growth and productivity in local and state economies that tax cuts never deliver.

When states ignore these facts — as Kansas and Wisconsin have — they undermine the prosperity, security and mobility of their citizens.

The high road to economic growth and worker security is the better course for Iowa.

Colin Gordon is a professor of history at the University of Iowa and senior research consultant at the nonpartisan Iowa Policy Project in Iowa City. He is the author of reports in IPP’s “State of Working Iowa” series. Contact: cgordonipp@gmail.com.

 

Protect Iowa taxpayers from bad spin

Let’s protect taxpayers from thumb-on-the-scale rules that give a minority viewpoint a decided and sometimes insurmountable advantage over the majority.

“Protecting Iowa’s taxpayers,” reads the headline on the newspaper column, but the column contradicts that.

On the pages of major state newspapers this week, Iowans for Tax Relief (ITR) is offering its predictable and tired promotion of tax and spending limitations that are neither necessary nor fair.

Instead of protecting taxpayers who live in Iowa and do business here, these gimmicky limitations promote an ideological agenda that fails to offer prosperity — ask Kansas — and is a poor solution to imagined problems invented by its authors.

The limits advocated by ITR never are necessary or fair, but this is especially so where we see K-12 school spending held below needs, where higher-education spending is cut and tuitions raised, and where worldwide corporate giants are taking bites out of Iowa millions of dollars at a time — over $200 million in the case of Apple last week.

By all means, let’s protect taxpayers from thumb-on-the-scale rules that give a minority viewpoint a decided and sometimes insurmountable advantage over the majority. The big money put behind these ideas make elections less meaningful, and erode Iowans’ ability to govern themselves.

The real path to prosperity for Iowa is a high-road path that rests upon sensible investments in education and public infrastructure that accommodates commerce and sets a level playing field for business and individuals. It means promoting better pay to keep and attract workers who want to raise their families here, and sustaining critical services.

Time and time again, we and others have shown irrefutably that Iowa is a low-tax and low-wage state. We already are “competitive” to the small degree that taxes play a role in business location decisions; even conservative analysts such as Anderson Economic Group and Ernst & Young put Iowa in the middle of the pack on business taxes.

Suffice it to say, you are being peddled a load of garbage by the far right and the privileged, who take what they can from our public structures and policies, and attempt to deny others not only public services, but also a say in the funding of programs that promote opportunity and prosperity for all.

The same suppression mindset prevailed in the Iowa Legislature in 2017 as a majority bullied public workers and decimated workers’ rights. Now they are taking on tax policy in 2018, plus the possibility of new assaults on retirement security and renewed neglect of our natural assets of air and water.

Shake your head at the headlines, throw a shoe through the TV if you must, but only by engaging these issues at every step of the political process will we turn Iowa back from our low-road course.

This is the battle of the 21st century. We are living it. May we survive it.

Mike Owen, executive director of the nonpartisan Iowa Policy Project

mikeowen@iowapolicyproject.org