A group of advocates for needy Iowans is alleging that the state is making huge, "secret payments" to corporations — money they argue should be used, instead, to provide a tax break for the working poor. Victor Elias, a spokesman for the Iowa Human Needs Advocates, says in 2005, the state issued almost 32-million dollars worth of checks to corporations that were tax refunds for "research activities."
"With no oversight, no review by the legislature, no review to see if these research activities are producing anything good for the people of Iowa," Elias says. According to Elias, the income taxes corporations pay in Iowa are confidential, so these tax credits are confidential, too.
But Elias contends the checks the state is sending to some corporations are huge. That’s because if the tax credit for research activities is bigger than the corporation’s income tax payment to the state, the state sends ’em back a check to make up the difference. "What we would like, at the least, is that (state legislators) place a limit on the amount of refund checks these companies get," Elias says. "Iowa is one of only five states with a refundable credit. Even New York State limits the refunds checks to $250,000 per company per year. Iowa has no limit."
A few years ago, Elias says one Iowa corporation got a check for 11 million dollars. Elias argues that by limiting the amount money that can be paid to corporations for these research activity tax credits, legislators would have money to boost what’s called the "earned income tax credit" for individuals.