Over the last several years, the total dollar amount of state tax credits and tax cuts to corporations has increased substantially and put the state budget in the red.
As the state’s cost to pay for those benefits to corporations have grown significantly, investment in critical state services continues to decline. It’s created an on-going state budget mess that has resulted in Iowa families paying higher property taxes, public schools being shortchanged, fewer services for victims of domestic violence, and students paying higher tuition.
The huge cost of the state’s growing tax credits came under additional scrutiny in 2017, when state and local leaders in central Iowa decided to give $213 million in taxpayer incentives to the world’s most profitable company, Apple, to build a new data center. With just 50 permanent jobs created, the incentives means taxpayers are giving $4.26 million per job. That deal has led to many questions from Iowans about the approval process for huge incentives like these and if there is any state oversight of these agreements.
Instead of fixing the budget imbalance created by these corporate tax credits and breaks, Republican leaders pushed through a new $2.8 billion tax bill that will make the problem worse. The huge price tag – which includes another $500 million in corporate tax cuts — will cause significant problems for the state budget and virtually guarantee more cuts and anemic investments in schools and healthcare for the foreseeable future. The tax bill also gives outsized benefits to those at the top while too many everyday Iowans get nothing or end up paying more.
What’s happening here in Iowa has already played out in other states. In Kansas, a similar large-scale tax cut plan bankrupted the state. Lawmakers were forced to make huge cuts to basic services and a few years later raise taxes back up again because of the mess.
I don’t want that to happen here in Iowa.
According to a 2010 Iowa Department of Revenue study, the state had over 373 tax credits, exclusions, and tax exemptions that cost the state over $12 billion annually. And that doesn’t even count the extra $1 billion in corporate tax credits and cuts that have been enacted since that time.
Last year, we worked together to develop three common sense principles to make sure any new tax breaks considered last session were responsible and actually benefit everyday Iowans. They are:
1. Balance the state budget;
2. Be fair and simple for all Iowans; and
3. Provide relief for the middle class.
Next session, we should use those three principles as a guide and conduct a comprehensive review of state tax credits and tax cuts for corporations to guarantee Iowans are getting a good return on their investment.
Democrats believe it’s time to get back to the basics and re-focus the legislature on doing what’s best for working families, not just corporations and the special interests.