An Iowa research group says the number of manufacturing jobs continues to fall in the state, even after a new sales tax break was given to manufacturers, likely costing the state tens of millions of dollars.
Mike Owen, executive director of the Iowa Policy Project, says backers of the tax break cited a common policy idea that lowering taxes leads to more jobs, but that’s not what’s happening.
“What we can clearly see is that from the first nine months, that certainly hasn’t produced — with the sales tax break,” Owen says, “and it’s costing us more money than we expected, so it’s kind of a double hit.”
The tax break allows more exemptions for manufacturers when they’re purchasing supplies. The report says it could cost the state $80-million more than the original projection.
Owen says mixing politics with economic analysis may have led to overly-optimistic revenue projections.
He says, “At the same time, we’re seeing lower revenues in the sales tax, we’re also seeing jobs continue to decline in the manufacturing sector.”
Governor Kim Reynolds is now weighing options to deal with the additional revenue shortfall.
Thanks to Katarina Sostaric, Iowa Public Radio