MOST LARGE IOWA MANUFACTURERS ALREADY COMPLY WITH
PROPOSED CORPORATE TAX REFORM IN OTHER STATES
Fears That Companies Would Leave Iowa,
Harming State’s Economy, Are Unwarranted
Almost all major Iowa manufacturers maintain
facilities in other states that have adopted a corporate tax reform measure
known as “combined reporting” — including several outspoken opponents of
Governor Culver’s proposal to adopt combined reporting in Iowa, according to the
Washington, DC-based Center on Budget and Policy Priorities.
“Combined reporting” shuts down a variety of
loopholes that major multistate corporations use to avoid state corporate income
taxes. Sixteen states have used combined reporting for at least two decades and
four more have adopted it in the last four years.
Some Iowa corporations, such as Alcoa, suggest
that combined reporting will encourage companies to leave the state, due to
increased tax liability and compliance burdens. However, 31 of the 34 major
manufacturers examined in a new Center report already comply with combined
reporting in at least one other state or are a subsidiary of a corporation that
has a facility in at least one combined reporting state.
Two companies, Kraft Foods and Eaton Corporation,
have facilities in all 20 states with the combined reporting tax reform in
place. John Deere, Kraft, Cargill, ADM and 3-M have long-maintained their
headquarters in combined reporting states.
“Cleary, closing corporate tax loopholes would
not create an unmanageable burden for Iowa manufacturers, given that so many of
them already comply with combined reporting in numerous other states,” said
Michael Mazerov, senior fellow with the Center’s State Fiscal Project and
co-author of the report. “Claims that combined reporting would drive
manufacturers from Iowa or discourage corporations from coming to the state ring
hollow.”
Evidence from other combined reporting states
indicates that combined reporting would not harm Iowa’s economy, according to
the report. Seven of the eight states that experienced net growth in
manufacturing jobs since 1990 – Arizona, Idaho, Kansas, Montana, Nebraska, North
Dakota and Utah - had combined reporting in effect.
“Combined reporting would level the playing field
for Iowa’s small businesses,” said Mazerov. “Right now, most small companies
can’t take advantage of the corporate income tax loopholes that large multistate
corporations exploit, leaving them at a disadvantage.”
Combined reporting would also help Iowa maintain
adequate resources for services key to economic growth such as infrastructure,
public safety, health care and higher education.
The Center’s report, “Almost All Large Iowa
Manufacturers Are Already Subject To ‘Combined Reporting" in Other States”
is available at:
https://www.cbpp.org/4-3-08sfp.htm.
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The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. |