House and Senate legislators released the details today of tax credit reform legislation that will bring accountability and common sense to Iowa’s tax credit spending.
“We have listened to the public’s anger at abuses and we are responding with historic reforms that will reduce Iowa’s tax credit liability by more than $115 million from the current total of $525 million,” said State Senator Joe Bolkcom of Iowa City. “We are ending some tax credits, cutting many remaining credits, and dramatically increasing accountability for all tax credit spending.”
“We are shifting dollars away from large Wall Street companies and moving some of those dollars to support struggling Main Street businesses whose success will benefit more Iowans,” said State Representative Paul Shomshor of Council Bluffs. “In these tough times, we must give continue to support small businesses.”
“Tax credit spending will no longer be a secret to Iowa taxpayers and they will no longer be on auto-pilot,” said Bolkcom, who chairs the Senate Ways & Means Committee. “Iowans don’t know if the money spent on tax credits is producing the promised jobs and economic growth. That will change this year.”
The reforms include the suspension of the film tax credit program for two years; lowering the cap from $185 million to $120 million on business tax credits; cutting the Iowa Fund of Funds contingent tax credits from $100 million to $60 million; an overall cut of 10 percent for many other tax credit programs and an on-going oversight process which will regularly evaluate all tax credits for results. Credits which do not produce results will be fixed or eliminated. In addition, the Supplemental Research Activities Tax Credit will be cut in half for large corporations and increased to help small businesses.
“Every part of the budget is being cut and that will now include tax credits,” said Shomshor, who chairs the House Ways & Means Committee. “The public will know who receives each tax credit, the purpose of that credit, and the dollar amount spent on it. As we give tax credit spending the same careful, regular, open examination as the rest of the budget, we will both save money and make sure the dollars we do spend benefit Iowa middle class families.”
“Tax subsidies can no longer trump educating our kids when it comes to our public spending priorities,” added Bolkcom. “We all support effective economic development programs, but they must be far more transparent and accountable for creating good paying jobs.”
The legislation was developed by a group of House and Senate legislators, including: Sen. Joe Bolkcom, Sen. Roger Stewart, Sen. Swati Dandekar, Sen. Rich Olive, Sen. Pam Jochum, Sen. Bill Dotzler, Sen. Matt McCoy, Rep. Paul Shomshor, Rep. Doris Kelley, Rep. Tyler Olson, Rep. Janet Petersen, Rep. Donovan Olson, and Rep. Roger Thomas.