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Plan to disclose large tax subsidies creates controversy

May 28, 2009

The recently-signed legislation to disclose the names of taxpayers who get more than $500,000 in research credits from Iowa has created some controversy, as discussed by the Des Moines Register:

Any business that collects more than $500,000 in refunds through the tax break will be made public, beginning with taxes filed on or after July 1.
That's problematic because it tips off competitors about trade information that could harm the business, several business advocates said. It could also make Iowa a less attractive place to do business, one said.

"It won't stop research but it's going to change how companies plan for that research and may impact whether or not it's done in Iowa or somewhere else," said John Gilliland of the Iowa Association of Business and Industry.

The research credit is "refundable," which means that if it exceeds your tax bill for the year, the state writes you a check for the excess. This happens a lot.

The only "trade information" that's likely to be disclosed is how aggressive companies are in calling things they do anyway "research" to qualify for the credit. Far better to repeal Iowa's futile corporation income tax and the research credit giveaway together.

Tags: corporate welfare.Economic development.Iowa tax policy.tax credits.