The Iowa Department of Revenue has released a first-of-its-kind report revealing the names of companies which received a research activities tax credit from the state worth $500,000 or more. A new state law requires such disclosure for all such research activities tax credit applications after July 1st.
Senator Joe Bolkcom, a Democrat from Iowa City, says many companies rushed to beat that deadline — so there’d be no public disclosure of the tax credit amounts they received.
“I don’t think there’s any quarrel about the notion that we need a good set of economic development programs, including a research activity credit. I think the debate has been around the fact that Iowa has the most generous research activity credit in the country that results in some of our best employers and best companies that we want to remain strong, but results in them receiving checks of anywhere from a million to $2 million — in one case $17 million — out of the state treasury.”
According to the Department of Revenue, the State of Iowa rewarded $6.7 million worth of state tax credit refunds in the last half of 2009. The department’s report shows Vermeer Manufacturing claimed a $1.3 million credit for research activities and five other companies claimed credits worth between a million and half a million dollars in the last six months of last year.
Bolkcom, who is chairman of the senate committee that deals with tax policy, calls the report a good start. “There needs to be slightly more clarity around the actual refunds that have been given out,” Bolkcom says. “I think there’s some question about whether the report is thorough enough.”
Business groups fought the requirement, arguing disclosing such detailed information may put some companies at a disadvantage, letting competitors see the extent of their investment in research projects in Iowa.