The Iowa Department of Revenue has completed a comprehensive review of special interest tax provisions that are part of the tax code. The survey is based on data from the 2005 tax year. It is called the Iowa Tax Expenditures 2005. It can be found here.
From the Department of Revenue:
The 2005 Iowa Tax Expenditure Study provides information on the impact of tax credits, deductions, exemptions, and income exclusions on the revenue raising capacity of the State’s four major General Fund taxes. The taxes considered in the report are the individual income tax, the corporate income tax, the sales tax, and the use tax. Most years these four taxes account for at least 90 percent of net General Fund tax receipts. The information provided in the report corresponds to tax year 2005. This is the most recent year for which complete tax return information is available. The information is provided for each tax expenditure on a tax year rather than on a fiscal year basis due to the difficulty of dividing taxpayers’ individual income tax and corporate income tax liabilities by fiscal year.
For tax year 2005 Iowa collected $2,277.9 million in individual income taxes, $214.2 million in corporate income taxes, and $1,787.9 million in sales and use taxes.
In preparing this report 276 separate tax law provisions were identified as meeting the definition of tax expenditures for tax year 2005. The report quantifies the impact of 223 of these provisions. For 32 of the provisions the impact was determined to be minimal (under $100,000). For the other 53 provisions the impact either could not be determined due to the lack of adequate data or the impact was incorporated under another provision.
The total impact of the 191 provisions for which estimates are provided equals $7,169.9 million.
For corporate income tax and individual income tax Iowa in most cases matches the provisions of the Internal Revenue Code. Other provisions, such as the out-of-state tax credit and the nonresident/part-year resident tax credit are required in order to avoid the double taxation of income.
Government programs funded through direct appropriations are subject to periodic review as
part of the state budget process. But programs funded through special features of the tax code,
such as tax exemptions, tax credits, tax deductions, and income tax exclusions, generally
escape such examination. Therefore, this study is intended to provide more information about
these features of the Iowa tax statutes and to improve government accountability.