Cultivation Corridor Executive Director Brent Willett, was featured in the Des Moines Register on a topic perhaps not well communicated by economic developers – that public financial inducements are designed to get a good deal done. Willett addresses head-on the misconception that corporate incentives burden the Iowa taxpayer’s pocket — he leads with a summary of the reality.
In an August 10th op-ed in the Des Moines Register, Willett wrote:
Not true. The vast majority of incentives awarded in Iowa are credits against future revenue, or tax credits.
Most tax credits are instruments to provide a reduction in tax liability for future investments by a company — tax revenue we currently are not receiving. The total value of a tax credits-based incentives package (which can include credits against tax, local property tax and other tax streams) are not a check written by the government to the company. Only after the new tax receipts are received by the relevant taxing bodies does the company receive a credit back.
One exception to this is Iowa’s Research Activities Tax Credit program, which offers “refundability,” or the ability of the company be assured it will receive the full value of its tax credit award. This program is used to help attract the most sought-after economic development investment of all — research and development activities, which are exceptionally capital-intensive and support extremely high-value jobs in the communities in which the R&D takes place. There is general agreement that R&D tax credits promote R&D around the world, a point made clear in December last year when Congress passed the omnibus spending PATH Act, which included a provision to make permanent the federal R&D tax credit.
For the rest of the op-ed, click here: Des Moines Register.