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Tax Credits make Iowa attractive to business! Oh, wait...

September 23, 2009

Boosters of Iowa's many "economic development" tax credits say they make Iowa attractive to businesses. We're still pretty ugly.

The Tax Foundation's new Business Tax Climate Index rates Iowa the 46th best business tax climate in the country. Only the tax nighmare states of Ohio, California, New York and New Jersey rank lower. This is consistent with Iowa's ranking as the least entrepreneurial state in the nation.

Why do tax credits to bribe businesses to come to your state create a bad tax climate? Because the businesses you are bribing realize that once they settle in, they will be taxed to bribe other businesses. It's like taking your wife's purse into the bar to finance your attempts to pick up girls. The girls may or may not let you buy them drinks, but they won't be impressed, and they probably won't want to go home with you.

Update: The Tax Prof has more on the Tax Foundation study.