A report from a nonprofit research organization indicates many of Iowa’s large manufacturers that oppose a corporate tax reform proposal, already comply with the measure in other states. Michael Mazerov, with the Center on Budget and Policy Priorities, is co-author of the report. He says 31 of the 34 manufacturers he examined deal with the measure, known as "combined reporting," in at least one other state.
"Companies complain about (combined reporting) and they certainly want to stop additional states from implementing it, because it shuts down their ability to take advantage of loopholes," Mazerov said. Twenty states require combined reporting, which closes loopholes that multistate corporations employ to avoid state corporate income taxes.
Governor Chet Culver has asked legislators to make the change in Iowa, but key lawmakers say it’s not likely the legislature will endorse the move. Critics say it would hurt major Iowa businesses like John Deere and Pioneer. However, Mazerov says those two companies already comply with the policy in other states.
"There’s no reason to think that adopting this policy would have a significant impact on the relative attractiveness of Iowa as a place to do business. The state corporate income tax is simply too small of an expense for companies to really drive their location decisions," Mazerov said.
Governor Culver estimates changing the tax policy in Iowa would generate an extra $75 million for the state. Mazerov says that figure would represent an 18 percent boost in corporate tax revenues.
Go to the Center’s website to see the entire report.