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You are here: Home / Business / State tax credit backers unite against plan to cap credits

State tax credit backers unite against plan to cap credits

March 21, 2017 By O. Kay Henderson

State Capitol.

Representatives of Iowa businesses and individuals who might be affected are pushing back against a GOP lawmaker’s plan to limit state tax credits.

This past year, the State of Iowa awarded $427 million in tax credits. The top tax credits benefit businesses with significant research programs and investors who restore historic properties. One of the other top tax credits is the “Earned Income Tax Credit” for low-income Iowans.

“It does a good job. It’s one of the best policies that you have in the state of Iowa to help those families,” says Mike Owen of the Iowa Policy Project.

Lana Shope, executive director of the Iowa Community Action Association, says the Earned Income Tax Credit is a “real incentive” for low-income Iowans.

“Oftentimes they’re taking that entry-level job, at an entry-level wage, because they don’t have a history of work experience for a variety of reasons,” she says.

Businesses like Monsanto say they might consider relocating their research facilities to other states if Iowa policymakers no longer allow the Research Activities Tax Credit to be “refundable.” Some businesses get a check from the State of Iowa because the size of their research operation gets a tax credit so big, it’s larger than their overall tax bill to the state of Iowa.

Nicole Crain

Nicole Crain of the Iowa Association of Business and Industry says the numbers show the Research Activities Tax Credit is working.

“The companies not only pay their employees good wages, they also give back to those communities and it really is a good benefit for the tax base of the state of Iowa… property taxes, all kinds of investment,” Crain says.

The state awards dozens of other tax credits ranging from a credit to cover adoption expenses to the $100 annual tax credit for Iowa firefighters and advocates are urging lawmakers to continue those as well. Crain says her business group is urging lawmakers to take a more comprehensive approach.

“Talk about what is comprehensive tax reform and what does that look like, not just a conversation about eliminating tax credits,” Crain says.

Some Republican legislators are trying to craft proposals that would cut income tax rates for individuals and corporations, but no plan has been unveiled. Governor Branstad said in January the state isn’t in a financial position to cut taxes this year.

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Filed Under: Business, News, Politics / Govt Tagged With: Democratic Party, Legislature, Republican Party, Taxes, Terry Branstad

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