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These figures raise serious questions about the need for state help to cover what may be normal expenses for these large, profitable companies.
“Is it a better use of taxpayers’ money to send millions in checks to profitable companies to do research they would do anyway, or to make sure schools can hire enough teachers next fall?”
Iowa lawmakers’ budget dilemma this year is largely self-inflicted — revenue shortfalls a product of legislators’ penchant for tax cuts over the past 20 years.
Iowa continues to give a lot of money to companies that aren’t paying income tax.
Whether we are looking at the entire range of taxes that fall on businesses or just the corporate income tax, the fact is that business taxes in Iowa are low.
Iowans cannot afford new raids on the General Fund when many public services have not been restored to pre-recession levels.
Iowa lawmakers must recognize the long-term impact of tax cuts on spending choices. Past choices will force future legislatures to lower investments on critical services on which economic growth depends.
This tax credit is used relatively little in the way one might expect of a tax credit: to reduce taxes. Rather, the credit is used mostly to provide subsidies, sometimes in the millions of dollars, to corporations that actually pay little or no income tax.
“This report is the latest evidence of the need for reform of this poorly named ‘tax credit,’” said Charles Bruner, executive director of the Child & Family Policy Center. “The credit is used less to reduce taxes than to provide straight subsidies to big companies through the tax code, outside the budget process.”
Through a largely closed-door legislative process, legislators crafted a bill without public testimony or expert review and makes very minimal changes to current law. While the Governor called for action on the Tax Credit Review Panel’s recommendations to build $52 million in savings into his proposed Fiscal Year 2011 budget, the legislative package rejects almost all of that panel’s recommendations.