A Call to Action on the Benefits of “DISCOUNTED” Tax Reform for all Iowans

The Goal: To communicate a tax plan that puts more money in everyone’s pocket, immediately; drives our property values higher, faster, building real wealth; grows Iowa’s economy by making our tax system and government more competitive, solves the deficit problem, and the benefits of which are easy to understand while putting opponents at a significant disadvantage.

1. Supporters of discounting have to do two things in order to get this legislation passed, putting more money in everyone’s pockets , growing our economy and putting opponents on the defensive:

First, we have to educate everyone holding office, and everyone running for office, (Democrats, Independents and Republicans, alike), about the benefits of the “DISCOUNTING” approach to tax reform for the individual taxpayer, the government, itself, and for the economy.

Secondly, we have to communicate the evidence that discounting will work to our fellow voters in order to speak with one voice in firing up our most ardent supporters in the Legislature. At the same time, we have to convince every elected official and candidate who is uncertain about the benefits of discounting, that this has to be his or her first priority in the new session. DISCOUNTING has to succeed next year. Doing this will also make it easier for candidates who support us, by supporting discounting, to raise money and to attract valuable volunteers.

2. Why “discounting?” Because every American, rich or poor, black or white, man or woman, believes that every other American is entitled to a discount on every imaginable product, or service. If we explain that discounts can extend to government and that they are good for taxpayers, governments and the economy, too, then we can fire up a lot of new supporters.

Most importantly, America is filled with consumers, not voters. To address the voters whom we intend to attract by speaking in terms of discounting, we will be speaking to them in their language, and our potential for success with them then goes straight into the stratosphere. In other words, THEY WILL UNDERSTAND WHAT IS IN IT FOR THEM.

Lastly, we have to convince everyone that the laws of economics, properly applied, will provide far greater benefits for all of us, and will provide those benefits much longer than any politically driven redistribution of wealth.

3. How do we convince everyone of the potential, effectiveness and benefits of the “discounting” approach? Give everyone an example. An example that everyone knows and trusts. An example that will eliminate a lot of the work our supporters in the Legislature would normally have to do in explaining our position, and the benefits of our plan to their constituents. An example that will convince voters of the integrity of
our intentions and our ability to succeed on their behalf. Let’s use Hy-Vee, Fareway and WAL-MART as Iowa’s model for “discounting” tax reform.

4. How will we prove to every critic that it will work? By repeatedly pointing out how discounting works for Wal-Mart: When Hy-Vee, Fareway and Wal-Mart discount their prices, they attract more customers, make more money, hire more people, open more stores and they GROW. It works the exact same way for taxpayers, governments and economies. Just think of Iowa as a store instead of a state, and that we have 49 competitors, (states), out there whom we have to defeat.

5. Isn’t the discount really just a “flat” tax under another name? Yes, but what you call something makes an enormous difference. The term “discount” is much harder to politicize. And, secondly, if you think about TOOTHPASTE, it offers us the same valuable TRANSPARENCY.

In other words, if you were standing in line at Wal-Mart to buy toothpaste and the man in front of you was unemployed, and the man behind you was President Bush, everyone would get their toothpaste and no one would picket the store. WHY? Because everyone would know what everyone else is paying. The problems always occur when government creates an endless number of tax brackets and then showers the anointed with special tax credits. When that happens no one knows what anyone else is paying, trust goes out the window and government has more power over all of us by constantly dividing Americans into rich vs. poor, men vs. women, management vs. labor, etc., etc., etc.

6. So how does it apply to Iowa? Think of Iowa as one store among 50 stores in America. Whoever has the lowest prices, (TAXES), attracts the most customers, (TAXPAYERS), does the most business, and grows the most.

7. How does it apply to me as a customer, or taxpayer? With new legislation, you should be given the option of paying your Iowa income taxes either with all of your current deductions, or with your new discount, whichever puts the most money in your pocket immediately.

8. What are the benefits for me as an individual? You will have the freedom to choose between filing with all your deductions, or with your new discount. Your tax return will now be postcard-sized if you choose to take advantage of your new discount. Secondly, discounting is not only designed to put more money in your pocket, immediately, but, because of the influx of new people and businesses to Iowa, property values, historically, have been driven higher, faster, helping you build real wealth for yourself.

9. What would this new legislation look like?

The legislation needs to offer you the opportunity to file with all your deductions, or with your new “discount” at the rate of only 5.32% on EARNED income. You would pay 0% on your interest income, dividends, pensions, Social Security, and, JUST LIKE BILL CLINTON DID FOR HOMEOWNERS, 0% on all capital gains.

We could advertise our new tax system in other states where taxes are significantly higher, such as Illinois, and people would understand it instinctively if we model our ads after the way auto manufacturers sell cars:

“When you buy a new car you get two things: a discount on the price and 0% financing. Well now, if you move to Iowa, you can pay your personal and corporate income taxes with your new discount at only 5.32%, and you’ll pay 0% on interest income, dividends, pensions, Social Security, and all your capital gains.”

This discounting approach will be particularly effective in retaining young people and a lot of seniors who routinely leave Iowa for other states. And, even more importantly, we could attract a significant number of people and businesses from other states that are being stalked by their own state governments. Just imagine four, or five times the number of Californians coming to Iowa as we have had recently. And that’s just one state. How many people would cross a river from Omaha, or Moline to pay a third of what they are being charged in taxes today? How many have been coming over just to pay less for cigarettes because they get a discount on those taxes already?

10. What should we expect from opponents as a response? We should expect a very loud and disagreeable set of arguments, most of which will either be based on a lack of understanding when it comes to economics and business, or a carefully calculated series of false statements designed to frighten as many people as possible, (most likely related to enormous budget deficits). But that is where the Hy-Vee, Fareway and Wal-Mart example will do its most important work in helping people think rationally in spite of the misleading statements.

Research shows that Iowa will get 12,961 new jobs and the state’s tax revenues will rise by $100 million in the first year of this reform, ($24
million coming from discounting and the other $76 million coming from the economic recovery that is already underway). So there will not be a deficit.

The fact is that 20% of the Forbes 500 Corporations, the largest in the U.S., are headquartered in states surrounding Iowa. If our taxes were low enough, it is possible that we could attract five of these companies, which would double the number of Forbes 500 Corporations that we now have
.
And, with that kind of a discounted tax structure, Iowa would stand a much better chance of holding on to the five companies currently here.

11. HOW CRITICAL IS TIME? THERE IS NOTHING MORE CRITICAL THAN TIME BECAUSE THE FIRST TO DISCOUNT GETS THE BIGGEST RETURN, BY FAR, AND THAT RETURN GOES ON FOR DECADES. Just look at Hong Kong, or Ireland. Every state which follows the leader in discounting is only making an attempt at damage control to slow, or stop people and businesses from leaving. IOWA HAS TO BE THE FIRST TO OFFER TAXPAYERS THE DISCOUNTED OPTION.

12. Creating and implementing this plan calls for a grassroots movement. Toward that end I am circulating a petition that tells every elected official that this is the most important issue for them to pursue because it does the most for you while attacking any opponents where they are most vulnerable. Just think about it. Iowa’s Legislature will be passing legislation allowing seniors to keep all of their interest, dividends, pension and Social Security income, without any tax, just when many of them need it the most. And any opponents will have to explain to all those voters just exactly why they are not entitled to a discount on their taxes.