Comments from Iowa Chamber Alliance Executive Director Dave Roederer at the tax credit public hearing in Urbandale on Dec. 17.
Tax Credit Review Committee
Iowa Chamber Alliance
Urbandale Library
December 16, 2009
• My name is Dave Roederer, 321 E Walnut, Suite 100, Des Moines and I’m here representing the Ia Chamber Alliance, which are the 17 largest communities n the state.
o I have the honor to service as the Executive Director
• I would like to address the tax credits administered by the Department of Economic Development.
• Specifically:
o Enterprise Zone
o High Quality Job Creation
o High Quality Job Program
o New Capitol Investment
o New Jobs and Income Program
• We have analyzed the aforementioned programs from July of 2003 through November of this year.
• We first, thank the over 300 companies who have utilized these programs.
• It is a testimony to their commitment to the state and the vision that our state leaders had in creating these programs.
• Over the past 6 ½ years Iowa businesses utilizing these tax credit programs have invested over $12B in 330 plus projects in the state.
• The state has provided $667M or a 5.5% tax credit.
o For every dollar a company invested in the state; the state provided only 5.5 cents back to the company.
• These company’s investments have been made in 80 counties throughout the state by small and large businesses.
o 94% of Iowa business employ less that 50 employees
o But the 6% who employ more than 50 account for 60% of Iowa’s workforce.
o That’s why both small and large businesses are important to Iowa.
• 85% of the investments made by the companies have been in capitol investments (i.e. new equipment - and other depreciable items).
o This is significant because it represents long-term commitments.
o With capital investments companies are not likely to leave.
o Today, companies either are retooling or making major adjustments or they won’t be in business.
• Not all of theses programs focus on job creation but over 14,000 were created.
o In 2003 the average wage for new job was $20,300
o In 2009 the average wage was $42,400
• The downside?
o The number of projects peaked in 2006.
o We are at our lowest level since 2003.
• Because there is very little development.
• These programs are doing exactly what was intended.
o Help businesses remain and grow in Iowa.
• Some have advocated, “capping” the amount of credits.
o For these programs it would be a mistake.
o Why limit the states growth?
o If there is no investment there will be no usage of the tax credits.
o Lets not limit our potential
• Others have advocated “sun setting” the credits every so many years.
o Again for these programs we believe it would be a mistake.
o First of all we believe all programs should be reviewed every year and my experience with “sunsets” is they are only analyzed when they are to “sunset.”
o We also believe the programs that tax us (income, sales, property, etc.) all should be reviewed as often and as carefully as the tax credits.
o Most companies plan expansions and locations in terms of 2-5 years and often longer.
• If we have on our books that tax credits will “sunset” the company will not be able to include those credits as a possibility in the business plan.
• Today you will hear varying degrees of two philosophies;
o One says the state should tax everything and every person and anyone who gets an exemption or tax credit must prove his or her case.
o The other says the earner should retain the money earned and the state must make a strong case to take part of it.
o We fall in the later.
• We ask that you not only support the five tax credits we have discussed today but advocate for more usage to grow the states economy.
• Thank you for listening