22
Feb
2005
Here is one simple and very powerful idea to help economic development in Iowa: The currently high ordinary income tax on business capital gains needs to be replaced with a capital-gains tax to provide an incentive for entrepreneurs to create more jobs in our state.
The current tax is too high and kills job growth. I am amazed at how many business leaders and public economic-development officials are shocked to discover that Iowa does not have a capital-gains tax in place. In Iowa, if you work hard, start a business, grow that business, and then at the appropriate time sell that business, you are taxed on any gain as straight ordinary income. Needless to say, this tax can be a huge factor in determining whether to start your business in Iowa. Perhaps this does not influence a Fortune 500 company like Wells Fargo or John Deere as to whether they will invest in Iowa, but to a small- and medium-sized entrepreneur, the types of businesses that Iowa desperately needs to have more of, this tax can have a make-or-break impact.
Iowa does have a tax exclusion for what I bet was to help the sale of the family farm. In simple terms, any tax on the gain is excluded from the sale of assets, not stock, by a majority owner who has owned and worked the asset for more than 10 years. But the complexity and limited nature of this exclusion doesn't do the job. For starters, 10 years is eons in the high-tech world. And most business sales, for a host of reasons, are structured as stock transactions.
A major concern in Iowa, rightfully so, is the "brain drain" of many of our best and brightest young people. But Iowa also experiences another and significant "brain drain" that is also extremely damaging to our state and its economy. We encourage our successful seniors to go down to their local CPA firm and pick up the 50-page report on how to become a resident of Florida so they can avoid Iowa taxes on business dispositions. Too often, with this change in residency goes community commitment, charitable contributions, additional entrepreneur efforts, and community energy and spirit. This is dumb tax policy that is bad for economic development. I'm asking the governor and our state legislators to address this issue as one of their top priorities to encourage economic development in Iowa. It would be simple to change. Let's get it done.
Mike Whalen
Founder, President, and CEO
Heart of America Restaurants & Inns
Editor's note: Whalen and Gregory Cusack, former chief benefits officer of the Iowa Public Employees' Retirement System, will participate in a forum on Social Security reform from noon to 1:30 p.m. on Friday, February 25, at St. Ambrose University's Rogalski Center.
Blacks Might Be the Biggest Winners in Social Security Reform
There is no more divisive an issue in American politics right now than privatization of Social Security. While even most Democrats acknowledge something must be done to save the system, debate rages over who will win and who will lose if the president's plan makes its way through Congress.
It is fitting that the president's biggest push for personal accounts has come during the month of February, Black History Month. For blacks, the switch to personal accounts would be a historical victory and a step toward equality.
In the current system, those who live the longest ultimately get the greatest return. Statistically, black Americans and the working poor live the shortest lives. They die long before they can withdraw from Social Security the lifelong investments they've made.
While Republicans like the ideology of giving individual Americans more control over their own futures, and thus support the president's plan, Democrats should recognize the reality that some of their biggest constituencies will be the biggest winners. Social Security reform is an opportunity for politics to be put aside and real civil-rights progress to be made.
Latreece Vankinscott
Chief Operating Officer
The Heartland Institute
Chicago
The current tax is too high and kills job growth. I am amazed at how many business leaders and public economic-development officials are shocked to discover that Iowa does not have a capital-gains tax in place. In Iowa, if you work hard, start a business, grow that business, and then at the appropriate time sell that business, you are taxed on any gain as straight ordinary income. Needless to say, this tax can be a huge factor in determining whether to start your business in Iowa. Perhaps this does not influence a Fortune 500 company like Wells Fargo or John Deere as to whether they will invest in Iowa, but to a small- and medium-sized entrepreneur, the types of businesses that Iowa desperately needs to have more of, this tax can have a make-or-break impact.
Iowa does have a tax exclusion for what I bet was to help the sale of the family farm. In simple terms, any tax on the gain is excluded from the sale of assets, not stock, by a majority owner who has owned and worked the asset for more than 10 years. But the complexity and limited nature of this exclusion doesn't do the job. For starters, 10 years is eons in the high-tech world. And most business sales, for a host of reasons, are structured as stock transactions.
A major concern in Iowa, rightfully so, is the "brain drain" of many of our best and brightest young people. But Iowa also experiences another and significant "brain drain" that is also extremely damaging to our state and its economy. We encourage our successful seniors to go down to their local CPA firm and pick up the 50-page report on how to become a resident of Florida so they can avoid Iowa taxes on business dispositions. Too often, with this change in residency goes community commitment, charitable contributions, additional entrepreneur efforts, and community energy and spirit. This is dumb tax policy that is bad for economic development. I'm asking the governor and our state legislators to address this issue as one of their top priorities to encourage economic development in Iowa. It would be simple to change. Let's get it done.
Mike Whalen
Founder, President, and CEO
Heart of America Restaurants & Inns
Editor's note: Whalen and Gregory Cusack, former chief benefits officer of the Iowa Public Employees' Retirement System, will participate in a forum on Social Security reform from noon to 1:30 p.m. on Friday, February 25, at St. Ambrose University's Rogalski Center.
Blacks Might Be the Biggest Winners in Social Security Reform
There is no more divisive an issue in American politics right now than privatization of Social Security. While even most Democrats acknowledge something must be done to save the system, debate rages over who will win and who will lose if the president's plan makes its way through Congress.
It is fitting that the president's biggest push for personal accounts has come during the month of February, Black History Month. For blacks, the switch to personal accounts would be a historical victory and a step toward equality.
In the current system, those who live the longest ultimately get the greatest return. Statistically, black Americans and the working poor live the shortest lives. They die long before they can withdraw from Social Security the lifelong investments they've made.
While Republicans like the ideology of giving individual Americans more control over their own futures, and thus support the president's plan, Democrats should recognize the reality that some of their biggest constituencies will be the biggest winners. Social Security reform is an opportunity for politics to be put aside and real civil-rights progress to be made.
Latreece Vankinscott
Chief Operating Officer
The Heartland Institute
Chicago
