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The Iowa Film Credit explosion: we shouldn't be surprised.

September 19, 2009

Iowa's statehouse politicians will all be shocked, shocked that corruption and mismanagement were rife in the Iowa Film Credit program. We should actually be more surprised when such programs aren't mismanaged and looted. Incompetence and exploitation are practically built in to all of such tax credit corporate welfare programs.

Think of the incentives that underlie these programs. The politicians like them because they can call press conferences and issue press releases to credulous media outlets talking about the "jobs" they have "created" by taking our money and giving it to other people. Once the press conference is over and the lazy news reports have been published, the part of the job they like and care about is over. There are no good press releases in the dull work of making sure records are maintained, reports are filed, and standards are enforced.

The agency heads live to make the politicians happy. The politicians only care about the initial splash, not the follow-up, so the agency heads are the same way. They see their job as giving away our money, rather than taking care of it. As long as the happy news stories keep coming, what's a taxpayer-purchased Mercedes or a Land Rover, anyway?

Tax Credit programs have a special vulnerability to corruption and mismanagement. Tax returns are normally confidential by law. That means if the inept Iowa Department of Revenue and the indolent Department of Economic Development fail to catch problems, they can't get caught. The legislature this year has required public disclosure of the largest tax credit recipients, but we are still a long way from transparency in these programs. When there's lots of incentive to give away money, little to make sure it's spent wisely, and no oversight, you have ideal conditions for waste and corruption.

The real way to make Iowa attractive to entrepreneurs is to get the state out of the "economic development" business, which has become a scam to take money from us and give it to people with good lobbyists. The state gives away more in economic development tax credits than it collects in corporate income tax. Iowa would make a far better impression on potential investors by closing down both the corporate income tax and the tax credit programs, while picking up millions of dollars to boot.

But there are no good press releases in that.

Tags: corporate welfare.Economic development.film credits.harold hill.iowa tax policy.