Like to Give Iowa a Try?

Richard Doak of the Des Moines Register argues about legislatures overemphasizing the role of tax breaks in manipulating the public’s behavior:

The other argument for lowering taxes is to stay competitive with other states. There might be something to this. Everyone has heard about the affluent retirees who move to Texas because it has no state income tax. But if economic growth is inevitably attracted to states with the lowest taxes, why does the most robust growth in the Upper Midwest occur in Minnesota and Wisconsin, the two states with not only the coldest climates but the highest taxes?

Again, the point is that the state tax code is vastly overrated as an instrument for shaping the state's economy. Despite what some lawmakers seem think (like those who came up with the notion of exempting young adults from the income tax), most human beings do not make every life decision based on its tax consequences.

You may have heard the media frenzy after Republicans in Iowa’s Legislature submitted a proposal to have only residents over the age of 30 pay state income tax. Now, since most people deduct their (usually much smaller) state franchise fee out of their federal income tax this only looks good if you work at the IRS precinct for the Hawkeye State. But it underlines the frustration many states have keeping younger people around. There’s no set answer but Iowa’s predicament is particularly curious.

Let’s start with the obvious. Iowa usually finds itself in the news when political campaigns set up shop for its January Presidential caucus. The rest of the time, the word “Iowa” is associated with one thing: college sports. It’s not the only state that has the problem is being ignored unless sports is involved. But it is true that Iowa is one of only a handful of states with no professional sports teams of any kind. But the importance of the University of Iowa and Iowa State University is more than just athletics. Already there’s a large biotech program that is growing at ISU. The state should match that by setting up a center for biomass fuel research at U Iowa. That will help encourage people to attend the state’s schools.

Once they arrive, it might seem like keeping them around would be difficult. But it’s more nuanced than that. Iowa lacks a major airport and with it, nonstop flights to escape the wintry chill. The cultural offerings of Chicago and Minneapolis knock the state out for the count. But even places like Austin, Texas have vibrant nightlife communities centered around would you believe live music? All this implies that Iowa must be a rural state with plenty to see outdoors. Interestingly though, there are no national parks in Iowa.

Perhaps that is the whole reason the state suffers, it’s maddeningly rural. Few parts of the state are wild, and only slightly more urban, leaving you with rows, and rows, and rows of corn and not much else to see. One possibility is to turn more of the state back to the wild and reintroducing bison to that wilderness area. As luck would have it, this would trigger resort building as wildlife is a year round tourist attraction. And lastly but not least, gambling is legal in Iowa if conducted on riverboats. Imagine the excitement of seeing live bison during the day, enjoying the sybaritic pleasure of a Las Vegas sized casino at night…and then whiling away time cross-country skiing and ice skating in the winter or playing baseball in an honest to god cornfield in the summer.

If you add in affordable housing, good public transportation, nightlife and new cultural opportunities, a new focus on education and more non stop flights, Iowa could just become the new magnet for America’s youth. And even if the state falls a little short, what does it have to lose?