Still good advice — accountability and balance

All tax credits, not just the film credit, demand scrutiny heretofore ignored.

It’s good to see more and more acceptance of the idea of accountability and balance to meet Iowa’s needs.

Everything must be on the table in budget decision-making, as Governor Culver insisted in his Condition of the State message earlier this year, and we have seen signs that this sensible, balanced approach could be taking hold in the Statehouse.

For many years, the budget hawks at the Iowa Fiscal Partnership have been making the pitch. One such report, in 2006, “Looking Behind the Curtain,” challenged Iowans to consider how to review the giant — and often secret — business subsidies that were draining the state of revenues needed to meet Iowans’ needs.

As noted then by the Des Moines Register, in a December 22, 2006, editorial:

Public dollars are the public’s business and should come with public accountability. Lawmakers should ensure that. They can get ideas about how to start by picking up a copy of the Iowa Fiscal Partnership report. [Click here for the executive summary of the report.

Late in the 2009 legislative session, lawmakers passed a measure to permit limited

Mike Owen
Mike Owen

public scrutiny of Iowa’s generous research subsidies that have allowed some of Iowa’s largest corporate operators not only to avoid income tax, but to receive state checks in the millions while school districts are facing cuts.

The scandal around the state’s film-credit program has contributed to the recognition by the Governor, legislative leaders and many in the media that all tax credits, not just the film credit, demand scrutiny heretofore ignored.

This has extended as well to business advocates. In fact, an economist for the business-oriented Tax Foundation succinctly made the point in a Register story on Sunday, that “the bottom line” is that these subsidies cost money.

“The big problem is that politicians and taxpayers tend to see them as a tax cut, but the correct way to look at them is that they are really government spending through the tax code.”

If a rose is a rose by any other name, a tax credit is spending whatever you call it. Like any spending, there should be a good reason for it, and with tax credits, it is not a given that they can be defended. It is long past time for review and reform.

The Governor has set up hearings for Tuesday in Cedar Rapids and Wednesday in Urbandale for advocates and experts to weigh in on the value — or lack of same — of many such subsidies. Click here for the agenda, time and location of each meeting.

Posted by Mike Owen, Assistant Director

Author: iowapolicypoints

The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy. By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.

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