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2007 IOWA CORPORATE WELFARE BILL: $516 MILLION

March 18, 2008

David Brunori at Tax Analysts ($link) notes a report from the Iowa Fiscal Partnership on the wild proliferation of tax credits in Iowa in recent years:

The Iowa Fiscal Partnership has published an insightful critique of the proliferation of tax incentives in the state. Iowa granted $516 million in tax incentives in 2007, up from $111 million in 2001. The group is concerned, rightfully so, with the state's ability to fund education, healthcare, environmental protection, and other important public services.

...

The partnership also calls for a moratorium on the enactment of any additional tax incentives. Some will say that such a moratorium is a sign that Iowa would be less friendly to business. But Iowa has created 24 tax credit programs since 2000. Isn't that enough? Could there be a tax break that a business wants that's not already offered by Iowa? No, those suggestions aren't antibusiness, they're just good government.

Exactly. These breaks aren't "pro-business;" they're pro some businesses, the ones with good lobbyists, at the expense of everyone else.

The $516 million in tax incentives in 2007 is more than the entire net receipts of Iowa's corporate income tax. If tax incentives were any good at economic development, we'd be better than last place in Iowa as a home for entrepreneurs. A zero corporate tax rate could benefit everyone, not just the well-lobbied. That may be why there isn't any lobby for a zero corporate rate.

Oh, and remember, Iowa "can't afford" to couple Iowa's depreciation rules to the federal rules.

Related: MILLIONS FOR MICROSOFT, DIDDLY FOR YOU

Sometimes I think State 29 has the right idea for legislative reform.

Tags: corporate welfare.David Brunori.economic development.iowa tax policy.

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