High school civics class teaches us that citizens pay taxes to the state to help finance goods and services which benefit the public at large. We pay a gas tax to help build and maintain public roadways. We pay sales and property taxes to construct public schools and pay teachers. We pay a variety of taxes because we enjoy public goods and services. But why is the state of Iowa writing tax payer funded checks to for-profit companies?

The Iowa Fiscal Partnership (IFP), a joint public policy initiative of the Iowa Policy Project and the Child & Family Policy Center, reported last month that in 2017, $36 million was paid to companies that didn’t pay any state income tax.

The Research Activities Credit (RAC) is meant to reward companies for conducting research in the state. The RAC is not inherently bad. Rather, state funding for research and development has led to innumerable breakthroughs in various STEM and non-STEM fields. We are a smarter and more developed society because of this overall increase in knowledge.

The issue, however, lies in the details of who benefits the most from the tax credit and the juxtaposition of the GOP midyear budget cuts. In total, the state forwent or gave back $66.1 million in 2017. Seventy percent of that was paid directly to companies, not as refunds for taxes already paid for, but as “tax credits not needed to erase tax liability,” according to the IFP.

Rockwell Collins made $13.9 million in RAC claims. They are worth an estimated $12.9 billion. Deere & Co. and its subsidiary John Deere Construction claimed a total of $11.5 million. Their net worth is estimated at $34.8 billion. Green Plains Inc., a company involved in ethanol production, claimed $5.3 million. They totaled $3.6 billion in sales last year. These companies are highly successful and industry leading in some regards. 

The Editorial Board’s intent is not to shame these companies for using the Iowa tax law to their advantage. Instead we would like to ask the state legislature if they really want to choose the RAC tax give away over public education.

Senate File 2117, which was approved early last month, cuts $14.6 million from the Board of Regents’ budget. Now, the Senate GOP wants to cut state revenue with a proposed tax cut. The nonpartisan Legislative Services Agency released a report this week projecting state revenue would decrease by $1 billion annually. That is about 14 percent of the state’s current budget.

Just this past week, ISU students, professors and administrators went down to the capital to plead with lawmakers to not cut higher education funding. Will the state government, controlled entirely by Republicans, provide the funding higher education deserves? Or will they continue their pattern of unfunded, corporate tax giveaways?