Manufacturing Tax Breaks Suggested to Spur Job Creation in Iowa

Tax breaks for manufacturing suppliers was one of the proposed job creation mechanisms from a state economic development agency.
by | November 18, 2011

In a renewed effort to create jobs, the newly created Iowa Economic Development Authority recommended legislation this week that would give tax breaks to companies that supply the state's manufacturers, the Des Moines Register reports.

The agency has the authority to award up to $120 million in tax credits. Its proposal would simply reduce the amount of taxes paid by manufacturing suppliers whose sales take place in Iowa. Manufacturing was the single biggest contributor to the state's gross domestic product in 2010, according to a Iowa State University study.

Tim Whipple, the authority's legal counsel, told the Register that the proposal would reward supplies already doing business in Iowa while attracting new ones. He said it would also encourage more supplies to bring their business to the state. According to the Register, the plan would be theoretically self-funding through increased spending by manufacturing companies and taxes on the income of new employees.

The economic development agency also proposed creating a $25 million fund for providing grants and loans to expanding businesses. The incentives would be paid for through franchise and employee withholding taxes, rather than general state funds or other tax sources, the newspaper reports. Some criticized that proposal, according to the Register, saying that the money should come from the general fund, money for which all other state must compete, in the interest of transparency.


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