Opponents of multi-million dollar research and development tax credit told a state panel in Cedar Rapids today that the incentive should take a back seat to fixing the budget shortfall. The amount of research tax credits awarded is expected to triple to nearly $67-million per year by 2014.
Amy Logsdon with the Iowa Citizen Action Network says tax incentives should not be a priority because there’s a half billion dollar gap in the state budget. “It wouldn’t make sense for Iowa’s huge companies to be getting millions of dollars in credits for things they routinely do as a part of doing business, Logsdon says.
But business leaders say the tax break generates research that wouldn’t otherwise happen. Roman Terrill is an executive with a biotechnology company in Coralville. Terrill says,”Research activities have the power to both directly benefit and directly compensate a highly paid individual but also to have that work generate and transform an economy.”
An internal review of the research credit shows a return on the investment cannot be determined at this time. A panel of state department heads will make recommendations to the Governor on which incentives should be kept, cut-back, or eliminated. A second hearing is scheduled for Wednesday in Urbandale.