Labor leaders and consumer advocates say the legislature should consider eliminating a host of state tax credits before slashing the state budget.
A Department of Revenue report shows tax credits have increased nearly five-fold since 2001. Lana Ross of the Iowa Community Action Association says that amounts to half a billion dollars in taxes that could or should have been paid to the state, and it’s no wonder the state can’t afford to provide some services to the poor.
"We need to figure out a way in reviewing all of the revenue-generating ideas to get more money into the state to maintain the services that help working families," Ross says.
Victor Elias of the Iowa Child and Family Policy Center is urging legislators to review tax credits for businesses before cutting more deeply into programs that help the state’s youngest citizens. "We’ve heard a lot about the need to tighten our belts, but I do have one thing to tell you," Elias said to reporters during a news conference at the statehouse. "It’s hard to tighten your belt when you’re wearing a diaper. The children of Iowa are not going to stop growing because we’re having a fiscal crisis. They’re not going to stop needing health care. They’re not going to stop needing early education programs."
Elias is especially critical of the research and activities tax credit for businesses. According to Elias, Iowa businesses have escaped paying $265 million in taxes to the state over the past 24 years because of that credit.
Iowa Federation of Labor president Ken Sagar is critical of cuts in the state workforce. "It seems that our only response in these difficult times is to cut the resources that are necessary to make sure that public workers — those folks who take care of unemployed workers, injured workers (and) make sure that workplaces are safe — that’s an unreasonable response in our estimation," Sagar said.
Speakers at this morning’s news conference also questioned the wide array of sales tax exemptions in Iowa. For instance, Iowans who pay for repairs to their personal airplane don’t pay sales taxes, and those who get a massage don’t pay sales taxes either.