Governor Culver has temporarily sided with businesses over a tax issue, but the debate continues over the proposal.
Culver has rejected the idea of requiring public disclosure of a list of businesses which receive more than half a million dollars in refunds through the state research activities tax credit this year. In a written statement, the governor said he feared businesses would sue to keep this year’s information secret and the matter would be tied up in court for years.
The governor’s item veto, however, did not nix the proposal for future years, which means a list of companies that receive $500,000 or more in refunds from the state under the research activities credit will be publicly revealed in future years. John Gilliland of the Iowa Association of Business and Industry was among the lobbyists who urged legislators not to tinker with this tax credit.
"The research activities credit that Iowa offers to businesses that conduct research and development in Iowa is very attractive and is the reason that nearly a billion dollars of research activities are done in Iowa, providing literally hundreds of high-paying jobs," he says.
Some companies that are getting a big state tax refund for engaging in research and development argue they’ll be put at a competitive disadvantage if this tax information is made public.
"This was one of those provisions that was added on the very last night of the legislature and (it) was really not clear what it was that some legislators really wanted to find out," Gilliland says. "Our concern all along was that we don’t want Iowa employers to be put at a competitive disadvantage for their research projects here as opposed to their competitors around the world."
Representatives of the Association of Business and Industry, the Iowa Taxpayers Association and other business-related groups plan to lobby the 2010 legislature to reverse course and keep this tax data private.
Supporters of disclosure of these large refunds for businesses argue every aspect of the state budget should be open to public scrutiny and state tax credits should be analyzed to ensure they are achieving their intended purpose.