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District 60, I hardly knew ye

October 07, 2008

I recently bemoaned some tax policy positions of two candidates of Iowa House District 60, and the need to have to choose between them. I now realize that I was misled by the yard signs all over the neighborhood; the district lines bulge down so that while I have District 60 on three sides, I am actually in District 59, where at least one of the candidates appears to have some recognition of the folly of taxing existing businesses to lure and subsidize their competitors.

Bluish area is District 60. The Tax Update executive mansion is marked by the X.

One of the candidates who I mentioned posted comments on the post. One comment defends his plan for the state to make "forgivable loans" to students, who wouldn't have to pay them back if they stay in Iowa for 10 years - a plan I called "indentured servitude." The candidate, Alan Koslow, comments:

These are forgivable loans. They are handled not as expenditures on the budget. They allow HS students to go on to college giving those with little hope a better future while those who want to leave the state can as it will be treated as a regular loan. How is this indentured servitude. Are you against student loans?

"They are handled not as expenditures on the budget." That's reassuring. It is real money going to pay tuition now, on the hope that it's never paid back, but we don't have to count it as spending. That will help the state's budget situation, like magic!

"Are you against student loans?" That's a separate issue from whether I'm against these student loans. The flight of young people is a symptom of Iowa's deeper economic disease. Treating this symptom alone is like treating a painful tumor with painkillers. It doesn't solve the real problem.

As far as whether student loans should be subsidized, it seems likely that the raft of subsidies, including Pell Grants, eight different federal tax breaks, and so on, only increases the price of higher education. Subsidized lending has proven to be a catastrophic idea in the housing market, and it seems no wiser in higher education.

"How is this indentured servitude" Indentured servants were poor immigrants whose passage to the American Colonies was paid by a promise to work for free for the person paying passage - say, for seven years. The similarity of binding a student to the state's boundaries for 10 years in exchange for paying for passage through college is obvious.

Tags: economic development.iowa tax policy.

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