From EasternIowaGovernment.Com

DES MOINES
By Rod Boshart/SourceMedia Group News–
State tax credits for business development and research have spurred jobs and economic growth, but some state legislators were not convinced Wednesday that the activities would not be taking place without the incentives.
Also, members of the Legislative Tax Expenditure Committee said Branstad administration officials have signaled that they want lawmakers next session to end the film tax-credit program currently suspended through fiscal 2013.
Sen. Bill Dotzler, D-Waterloo, co-leader of the House-Senate economic development budget subcommittee, said he hopes to re-establish the Iowa Film Office within the state Department of Cultural Affairs and look at the possibility of setting up direct grants for specific film projects to replace the tax-credit approach.
“That old tax credit program is definitely dead. Drive a stake in its heart and don’t let it out in the sunlight,” he noted. However, Dotzler said he was still interested in trying to revive a way to nurture the film industry and the jobs it could create. “I think we ought to go back and revisit it. I think it was a good idea that went bad.”
Committee co-chairman Rep. Tom Sands, R-Wapello, said the ongoing film tax-credit scandal and related criminal prosecutions have “very possibly damaged the program where it will no longer be back because of public opinion if nothing else.”
During Wednesday’s committee discussion, Tim Whipple of the Iowa Economic Development Authority said the state’s high-quality jobs program has returned two dollars in increased tax revenue to the state treasury and leveraged $19.26 in capital investment for every dollar in state tax incentives that have been provided to qualifying businesses.
Between 2004 and September 2011, 201 projects have received nearly $385.6 million in state tax incentives. Those projects have made more than $7.4 billion in capital investments, created or retained 13,820 jobs and paid wages averaging $21.71 per hour.
In a separate report, Amy Rehder Harris of the state Department of Revenue said Iowa companies claimed $8.3 billion under the federal research activities tax credits in tax year 2008 and $48.6 million in state tax credit claims in tax year 2009 – based on the latest data available. About three-fourth of the state money went to large corporations, overall supported about 13,378 high-paying jobs, and the credits averaged about 4.3 cents on the dollar for the $1.2 billion worth of research activity conducted in Iowa, she told lawmakers.
However, Sen. Herman Quirmbach, D-Ames, said there’s no data that indicated the research and business development activities would not be taking place in Iowa even if the state offered no incentives and the reality is “we don’t know what we’re getting for the money we’re shelling out.”
Sands said he wasn’t sure what the 2012 legislative session will hold in terms of the state tax credit programs because there are some lawmakers who would like to get rid of the tax credits so there would be more money to spend in other areas and there are some lawmakers who would be willing to get rid of the tax credits to do more broad-based tax reform that would benefit all businesses.
Democrats on the interim panel cited a report on the state’s earned income tax credit indicating that 208,000 households filed $28.5 million in claims for tax year 2009 in pushing for another attempt next session to send Gov. Terry Branstad a boost in the credit that aids working families at a time of economic recession. The governor refused to sign a proposed increase in the earned income tax credit from 7 percent to 10 percent that backers said would have benefitted about 240,000 working families making $45,000 or less annually because he wanted it included in a broader package of tax reforms.
Committee co-leader Sen. Joe Bolkcom, D-Iowa City, said Wednesday’s review of the hundreds of millions of dollars Iowa spends in state tax credits was “long overdue.” But he added that the data presented begged the question: “Why does an Iowan making $17,500 a year pay more in state income taxes than some of the largest, most profitable corporations in the world, corporations which are making money in Iowa? In other words, why is Iowa taking from the working poor and giving to rich corporations?”