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Iowa can't decide what your 2010 tax rules are, but they can still give it away

March 29, 2011

There's no news to report from the Capitol on the impasse over Iowa's fixed asset cost recovery rules for 2010. Last week I was told that if they didn't fix it by last Thursday, it could drag on, and that seems prescient.

While they can't tell us how to do our 2010 Iowa tax returns yet (heck, it's not even April -- why are we so antsy?), they can sure spend it. The Iowa Department of Revenue has released its latest "Tax Credits Contingent Liabilities Report." Some highlights:

- In the last full fiscal year, 23 tax credits awarded by various state agencies added up to almost $182 million.

- For 2008, the last full year for which they have published statistics, Iowa awarded over $81 million in "refundable" tax credits. If you have refundable tax credits in excess of your tax for the year, the state writes you a check for the difference. The only difference between this and straight-up corporate welfare is that no legislative appropriation is needed to collect a refundable tax credit.

- The "Historical Preservation and Cultural and Entertainment District" tax credit has gone through the roof, with awarded credits rising from $15 million in 2009 to $50 million in 2010.

- Just five credits - the Historical credit, the High Quality Jobs Program, the Industrial New Jobs Training Program, and the two Enterprise Zone program credits -- add up to $145 million in 2010. If that has fired up an Iowa economic revival, it's an invisible one.

- When you count all of the tax credit programs, including the economic developments programs, research credits, earned income tax credit, and ethanol and biodiesel promotion, Iowa ran up a $243 million tab in fiscal 2010.

And it doesn't look like it's going to get much better:

Click to enlarge chart.

Rather than running hundreds of millions in futile tax credits through the economic development bureaucracy, Iowa ought to try something different -- let us keep our money and invest it without their help. The Quick and Dirty Iowa Tax Reform Plan is ready to go!

Tags: Corporate welfare.Economic development.Iowa tax policy.Quick and Dirty Iowa Tax Reform Plan.tax credits.