Hopefully the coming attractions will hold the attention of Iowa policymakers and the public as much as the feature now playing.
As the Iowa Fiscal Partnership (IFP) notes in a statement today, Iowans must follow more than the investigation of the state’s film-credit program and a report from a consultant about its operation over about six weeks.
Iowa’s entire tax-credit buffet for businesses demands scrutiny — especially when the Governor is anticipating budget cuts. Any considertion of spending cuts must put all spending on the table, including spending through the tax code. According to IFP:
These are terribly difficult budget times for the state of Iowa. Everything needs to be on the table, including indirect spending through the tax code. The film credit program needs every bit as much scrutiny as other spending, but so do all tax preferences to businesses. We have been heartened by the call of Governor Culver and others, including some of the state’s leading newspapers to seek a full review of more than just the film tax credit. The governor and state legislators must follow through to assure taxpayers are getting a good deal when we tell some firms that they need not pay taxes.
Iowa policy makers must recognize the problems with accountability that this investigation has exposed. We just don’t know enough about what state tax money is being used for, and that’s a problem with more than the film credit. As we have shown, and as Department of Revenue research has confirmed, Iowa hands millions of dollars every year to big corporations through the research activities credit. But the recipients, and the use of the money, have not received scrutiny from the legislators who have allowed this to happen.
We must not miss the overarching policy questions by limiting new oversight only to the film credit. All Iowa tax credits should be on the table with other spending choices, not just the film credit program.
“Follow-through” is the operative concept in the IFP statement. The Governor and the General Assembly took two important steps at the end of the last legislative session to promote better transparency and accountability for tax credits. They approved legislation to (1) cap a package of certain tax credits managed by the Department of Economic Development, including the film credit, at $185 million; and (2) to assure a public report on recipients of Research Activities Credit subsidies of more than $500,000, and amounts, to provide scrutiny while not hindering competitiveness for those recipients.
Taxpayers deserve to know how public money is being spent. Plans for a full review of tax credits is essential for sound fiscal decisionmaking.
Posted by Mike Owen, Assistant Director