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Tax Credits Have No Business in Business

State Senator Brad Zaun wrote a piece on the State of Iowa utilizing tax credits as the scapegoat for Iowa’s reckless spending habits. The Iowa Legislators has been spending too much money, which is the primary cause of our current shortfall, but I think steering the focus away from tax credits is premature.  While they are not the reason spending is out of control, tax credits in Iowa are a form of Corporate Welfare.

Senator Zaun mentions tax credits that have brought industries like Wind energy into the state and how tax credits can be used to create jobs this way.  Here’s the real problem with these tax credits.  When companies and industries come and grow in any location because of tax credits, often, these companies have unsustainable business models because their sustainability in the long-term is based on receiving these credits.

We saw this with biodiesel here in Iowa.  These companies were dependent on a temporary Federal tax credit and without it their business is unsustainable.  So what is the answer Senator Zaun?

Simple, eliminate the corporate income tax.  When the economy tanks, tax credits are eliminated or decreased and companies go out of business or leave the state of Iowa.  If we eliminated the corporate income tax, along with all corporate tax credits, when the national economy tanks, Iowa would be the state these businesses would be running to.  So while the goal of creating more jobs is the same, the impact of a recession is significantly different.  Iowa needs to be a business friendly state.  Our Right to Work laws have been under attack for a long time.  Governor Chet Culver seems to be on the leash of the Unions here in Iowa.  Labor costs are a huge issue.  By eliminating the corporate income tax we can solve many of these problems.

With increased business activity, tax revenue will also increase.  So while we have a significant shortfall in the budget, we can recover.  Unemployment benefits are being extended; social welfare benefit costs are sky rocketing in Iowa and nationwide.  People are out of work, so naturally the state’s expenses are increasing- while revenue is decreasing.  This is a simple sign of decreased business activity.  You can’t keep offering tax credits when we are laying off teachers, city employees, and many more.  They won’t have anywhere else to work.  If we eliminate these ineffective tax credits and reinforce our economy with strong business activity, Iowa will be the place businesses want to go.  We will have more jobs.  We will decrease our populations’ dependency on social benefits as a natural side effect.  Best of all for the state, they will have increased tax revenue without ever having to actually raise taxes.

Senator Zaun, this is what the state needs and this is what the Republican Party should be pushing during this legislative session.  I would implore you to follow suit and fight for Iowa jobs, Iowa businesses, and a stronger Iowa.

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