Tax Update Blog: Permalink

So our state would have more money, business would have less taxes if no movies were made here at all? I think that's what she means when she says it's money brought into this economy. Unless they are getting every penny they spend back from the state in a big hefty check. I am under the impression that if someone films here in Iowa instead of say, Canada, the state gives them the tax credit. But if they don't film here, there are no local jobs, no money spent in Iowa or on Iowa businesses.
It seems like it's similar to if the state says to someone who vacations in California every year, if you vacation here instead, you don't have to pay sales tax. Would that bring new money into the state? Or is it a cost to the state of whatever income we would have received if they'd just so happen to have come of their own volition and paid those sales taxes?
To me it seems like 50% of $X Million taxed in Iowa is more income to Iowa than 100% of $X Million never taxed (or taxed in California) because there was no reason to show up in Iowa.
I think the $77M is assuming everyone will want to make movies here with no incentive.

Stephanie, your timing is impeccable!

I could say the same for you!
But I'm still unsure as to how this is a loss for someone like you or me.
If the rules are followed, that it.

There will always be people that break and bend the rules, I see it more often in private and public enterprise than in government, but that's my own anecdotal evidence, and not really pertinent to the discussion.

But still.
Let me try to use my analogy with the slightly better understanding I have now.

Joe lives in Maine, every year he vacations in California. He has never considered going to Iowa. The Iowa tourism board says: turn in your receipts at the end of your vacation, and for every dollar you spend in Iowa, that you would have spent somewhere else, we'll give you a tax credit for 50% of that, and you can sell that tax credit to someone else who lives here, recouping 80% of that 50%(the brokers are charging 20%).
Joe decides to go to Iowa based on that offer. Joe spends $1000 on hotels (plus lal their fees), entertainment, restaurants, etc. He turns in his receipts and has a $500 tax credit to sell. He gets $400 back from his vacation after selling the credits.
The person who buys his credits gets $400 tax reduction.
The state and city got about $200 in hotel taxes, sales taxes, etc. The businesses got $800 in income to continue to employ staff, independent tax professionals, etc.
That was money our community would never have seen.
The $500 for the tax credit came from the state coffers, about $100 they got back (half of those taxes, I'm trying to use simple numbers), and $100 went to the Iowa business that brokers the deal, and $400 goes to reduce someone else's tax debt.
So the state in total spent $400 to get $1000 in income for our community members (via jobs, increased income, etc.).

What if the tax credit sale part didn't happen, would that make this economic development more palatable? What is Joe left the state with a check in his pocket?

I'm still trying to decide if I think this is a long term positive for Iowa, or if I want to just protect my pocketbook everyone else be damned because I don't give a crap about economic development, even if I lose my job.

I think it's just more complex issue than either side has been presenting.