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September 2012 Policy Study, Number 12-11

   

Orascom or OraScam? Corporate Income and Property Tax Reform Needed

   

Introduction

   

 

One can’t blame Iowans for having questions about the Iowa Fertilizer Company (Orascom) project, but the relevant answers aren’t about whether the owners are foreign or domestic, or how much each permanent job is costing the taxpayers, or even how many “net jobs” will be created, but rather why is this giveaway of taxpayers’ money still necessary? Why haven’t Iowa politicians long since reformed the corporate income and property tax system so that we have a better, level “playing field” for all businesses who want to start or expand in our state?

 

More fundamentally, why do Iowans put up with a “scam” wherein politicians shower our tax dollars on well-to-do businesses that would probably erect the firms in question even without any incentives? Why are our tax dollars increasing the “return on investment” of a favored few instead of being used for widespread, broad-based tax reform to improve the investment climate for all businesses who want to start or expand a firm in our state?

 

Would such an improved business climate result in more, fewer, or the same number of new jobs being created as the 165 claimed for the Orascom project? Given the many studies which show that most new jobs are created by small firms employing fifty or less employees, it is highly likely that many, many more than 165 good new jobs would be created by tax reform than by continuing the “economic development incentives” scam.

 

More fundamentally, is it morally justified to take corporate tax dollars from business X to give to their competitor? Is it morally justified to ignore workers who are fired when their employers lose market share to the firm which expands or updates its facilities using such tax dollars? Is it morally justified for the mainstream media to blame such difficulties on the “creative destruction of capitalism” when it is really state corporatism at work?

 

   

 

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