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September 2012 Policy Study, Number 12-11

   

Orascom or OraScam? Corporate Income and Property Tax Reform Needed

   

Iowa TIF Abuse

   

 

The same questions could, and probably should have been asked when the City of Coralville used tax incentives under the Tax Increment Financing (TIF) law to convince VonMaur department store to move less than five miles from Iowa City to Coralville.

 

As has been noted before, the Iowa TIF law is considered “one of the most indulgent” in the United States because of a lack of “effective state or local oversight mechanisms.”[25] There is no method for negotiation of revenue sharing and no oversight body. There is no prevention of “rollovers,” which keep the area in the TIF district long after the original work. There are no required performance guarantees, such as a certain number of jobs over a certain length of time, required of the developer taking advantage of a TIF. Primarily used by city governments, TIF does result in less tax money going to schools and county governments. In Iowa, state government makes up 44 percent of this money, at a cost of about $45 million statewide.[26] This money comes from working taxpayers as a result of higher personal property taxes.

 

Iowa State University researchers David Swenson and Liesl Eathington said in 2002 that TIF and other tax and loan incentives are “De facto entitlement for new industry and housing development…with little to no evidence of overall public benefit or meaningful discussion of the mean costs of the practice.”[27]

 

   

 

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