Senate approves tax credit reform
On Wednesday, March 17, the Iowa Senate approved tax credit reform by a vote of 32 to 18.
From the prepared remarks by Senator Joe Bolkcom, chair of the Senate Ways and Means Committee (Video)
Senate File 2380 is the long overdue tax credit reform bill. It is a first step that cuts tax credit spending AND brings more accountability to every tax credit. That accountability will give future Legislatures the information they need to make smart decisions about all tax credit spending.
If you haven’t heard the public’s anger about tax credit abuses, you haven’t been listening.
The senators who helped develop this legislation did listen, and we responded with this set of historic reforms that will reduce Iowa’s tax credit liability by more than $115 million, a cut of 22 percent.
We’ve made tough choices that will save money this year, next year and every year to come. By putting everything on the table, we’ve started the process of making state government leaner, more accountable to the public, and better able to serve the taxpayers.
We are ending some tax credits, cutting many remaining credits, and dramatically increasing accountability for all tax credit spending.
Dollars will be shifted AWAY from large Wall Street companies and moving some of those dollars to support struggling Main Street businesses. These small businesses are the businesses that are creating jobs and benefiting Iowans
When it comes to accountability, tax credit spending will no longer be a secret to Iowa taxpayers. The money we spend on tax credits will no longer be on auto-pilot.
Iowans will know if the money they spent on tax credits is producing the promised jobs and economic growth.
Here’s what this bill does.
We suspend of the film tax credit program for two years
We lower the cap on business tax credits from $185 million to $120 million;
We cut the Iowa Fund of Funds contingent tax credits from $100 million to $60 million;
The Supplemental Research Activities Tax Credit used by large corporations will be cut in half and part of the savings will be used to increase the Supplemental Research Activities Credit used by small businesses.
We impose a 10 percent – the same amount as last year’s across the board cut–for many other tax credit programs
Finally, we create an on-going oversight process which will regularly evaluate all tax credits for results. Credits which do not produce results will be fixed or eliminated.
Here’s the bottom line:
Every part of the budget is being cut and that will now include tax credits.
The public will know who receives each tax credit, the purpose of that credit, and the dollar amount spent on it.
As we give tax credit spending the same careful, regular, open examination as the rest of the budget, we will both save money and make sure the dollars we do spend benefit Iowa middle class families.
The legislation was developed by a group of House and Senate legislators, including: Sen. Joe Bolkcom, Sen. Roger Stewart, Sen. Swati Dandekar, Sen. Rich Olive, Sen. Pam Jochum, Sen. Bill Dotzler, Sen. Matt McCoy, Rep. Paul Shomshor, Rep. Doris Kelley, Rep. Tyler Olson, Rep. Janet Petersen, Rep. Donovan Olson, and Rep. Roger Thomas.