Consumer group questions Iowa tax credit overhaul

By MIKE GLOVER

DES MOINES, Iowa

Iowa lawmakers haven't gone far enough in overhauling the state's tax credit system and should limit the credits to $250,000 per year for research purposes, a coalition of consumer and labor groups said Thursday.

"Ensure it supports the startup entrepreneurial activities for which it was designed and no longer provides a corporate subsidy refund to highly profitable corporations that already pay little corporate tax," the Coalition for a Better Iowa said in a statement.

Lobbyists for business interests in the state have said the overhaul to the tax credit program is a fair compromise that has left neither side happy.

A package to reform the tax credits has already passed in the Senate. House leaders have said they will move soon on the measure.

Lawmakers began scrutinizing the tax credit program after two filmmakers and the former manager of the Iowa Film Office were criminally charged with mishandling the tax breaks.

But critics say their efforts aren't going far enough because they eliminate only $65 million of the state's $500 million in credits and do so for only two years.

Senate Majority Leader Michael Gronstal said a five-year review process built into the overhaul will let legislators weed out credits that aren't working.

"Many in our caucus agree that we should continue to look at this and that's why we put a review process in place," Gronstal said. "We're going to try to come up with a way to evaluate which credits work."

Gronstal acknowledged that the current measure likely wouldn't satisfy critics of the tax credit system. But lawmakers will be able to make bigger and more meaningful cuts if the economy improves, he said. Until then, they risk making the poor economy worse, he said.

"I think there's a pretty good shot that when the economy recovers we'll try to make a good evaluation of which of these make sense," Gronstal said. "It's a little tough to do when times are tough. We tried to squeeze things appropriately to where we didn't have to make further cuts in other areas."