Democrats in the legislature plan to enact a series of changes in state tax credits and they’ll continue the suspension of the state tax credit for films for at least two more years. Senator Joe Bolkcom, a Democrat from Iowa City, says lawmakers want to establish a permanent “Tax Expenditure Committee” as well to monitor state tax credits.
“It came to light in the legislature that in the area of the film credit that was made available to film producers in Iowa that we had some problems develop with that program and it’s drawn the attention of the legislature the need, really, for a comprehensive review of more than $500 million in annual tax credit spending,” Bolkcom says.
The former manager of the Iowa Film Office has been charged with misconduct in office and two Minnesota-based filmmakers have been charged with first degree theft for filing false tax credit claims. Bolkcom says the state’s attorney general asked legislators to extend the suspension of the film tax credits as his office sorts through to determine who may be eligible for tax credits that were already promised.
“We need to figure out where our liability exists with this program rather than eliminate the program or fix the program at this point,” Bolkcom says.
Democrats intend to set new, lower limits on the amount of state tax credits which are available for economic development projects. Representative Paul Shomshor, a Democrat from Council Bluffs, says legislators are hoping to the newly-created “Tax Expenditure Committee” will determine how many jobs are being created by companies that receive state tax credits. “That’s the most important thing to us — job creation in this state,” Shomshor says. “And we want to make sure that we help small businesses.”
Democrats do not intend to change the research activities tax credits that are claimed by large companies like Rockwell Collins, John Deere, Pioneer and others. Democrats do propose changes in another research activities tax credit that is awarded by the Department of Economic Development. Big companies could receive a credit of 3.5 percent for their investment in research and development, while small, start-up firms could get a tax credit worth up to 10 percent. Senator Matt McCoy, a Democrat from Des Moines, says it’s an attempt to do more to support entrepreneurs who’re just starting a new business.
“Shifting the focus away from what we consider the large, very-well-financed businesses and trying to shift those resources to the smaller, start-up firms so that they can do more in the way of job creation,” McCoy says.
Democrats plan to give the Department of Economic Development $8 million to award as tax credits to research-oriented firms that promise to create new jobs. In the current year, there has been $16 million available for that program. Republican legislative leaders say they’re supportive of an examination of state tax credits to ensure they’re fulfilling job creation goals, but they’re skeptical of scaling back some of the tax credit programs which have been available to businesses.
