Nobody Likes HF 730 (Iowa's Indentured Servitude Bill)

From the Register Editorial Board, of all places:

Iowa needs to retain and attract more young college graduates. But a bill in the Iowa Legislature that would grant tax credits to employers who pay back student loans is a bad way to try to accomplish that.

House File 730 would allow businesses that repay a new employee's student loan debt of up to $25,000 over three years to get tax credits of up to $7,500. Employers would have to pay the new worker a salary or wage of at least $25,000, employ the person within the state and start repaying the student loan within six months of the hiring date...

...It would be a misuse of precious public money to pay off student loans for workers who might very well have stayed in the state anyway. For example, about 65 percent of 2005 Iowa State University graduates stayed in Iowa and 70 percent of University of Northern Iowa graduates. Also, there is nothing to stop workers from packing up and heading across the state line after a mere three years.

Perhaps the most troubling aspect of this bill: It would be unfair to students and families who planned, scrimped, saved and avoided high loans. Knowing you can have $25,000 in student debt repaid could provide an incentive to borrow more.

Wow, did I start writing for the Des Moines Register? I basically said the same thing yesterday ("Bi-Partisan-Approved Indentured Servitude Coming To Iowa").

Meanwhile, over at the Roth & Company Tax Update blog:

This is just another way to make people who scrimp and save to finance college education feel like chumps. The effect of this is to have the state retroactively pay your college tuition through tax credits. As a vehicle to keep kids in the state, it makes as much economic sense as a free beer subsidy.

If the goal is to keep kids in the state, you'd do just as well to subsidize rents or car payments; at least that wouldn't discriminate against people whose parents paid for their education, or who went to a cheaper school so they wouldn't run up loans.

It would make a lot more sense if the legislature just got rid of all such bogus tax breaks and dramatically lowered the tax rates. Don't hold your breath.

Follow the progress of HF 730 and all of the other inane tax legislation at our 2007 Iowa Tax Legislation page.

Inane tax legislation...

Tell us how you really feel about it all!

You know what's the funniest thing about it all? Some business professor at the University of Iowa by the name of Jay Christensen-Szalanski created it. What does it say when some professor with a hyphenated last name who isn't British comes up with some idea that might become law? There's nothing crazier or girlymanish than a guy who takes on his wife's last name with a hyphen. The kind of people who pull that kind of crap can't think very far into the future, can they? If future generations of Christensen-Szalanskis keep the hyphenation trend going, their last name will be a lengthy morass before too long, sort of like the kind of legislation that pere Szalanski got past funnel week in the Iowa Legislature.