Mike, me and Film Credits

September 25th, 2009 by Joe Kristan

So many questions, so little time.
I shared a podium this week with Mike Gronstal, the Iowa Senate Majority Leader, at the Iowa Bankers Association convention. Also on the panel were Jeff Robinson from the state Legislative Services agency and Republican State Rep. Tom Sands of Muscatine.
Me, Jeff Robinson, Mike Gronstal, Tom Sands
It was a strange experience. The panel was supposed to talk about the deductibility of federal taxes on Iowa returns, a hot topic in the last legislative session. The guy from Legislative Services talked too long, so I hurried through my piece (short version: federeral deductibility is bad, but higher effective rates are worse). Senator Gronstal pooh-poohed the notion that increasing rates would be bad for Iowa businesses, and Rep. Sands defended deductibility.
Weirdly, the two never even mentioned film credits, the $363 million elephant in the room. It was like being at a funeral without anybody noticing the dead guy. When the time for questions started – and there was only time for one question, I had to say something, so I stole the question time. I asked (approximately): “We spend over $400 million on economic development tax credits. The Iowa corporation tax will net about $186 million this year. Wouldn’t Iowa be better off, and millions of dollars ahead, repealing the corporate tax and the credits together?”
I might as well have asked if Spiderman could beat up Batman in a fair fight. Sen. Gronstal acknowledged that the corporation tax is a minor component of state finances, but he likes how the film credit brings in an industry we never have had in Iowa. If I had time for a followup, I would have suggested we subsidize banana farms too, becauses we’ve never had them. I don’t even remember what Rep. Sands had to say. Neither seem to really get the idea of why “no corporation income tax” might be better for the Iowa economy than targeted tax credits.
I got the distinct impression that the legislature doesn’t yet realize how bad the film credit makes them look. I think Iowans are really unhappy with the looting of the state treasury by the film companies and with the film credit system that invited them in. They don’t seem worried about it yet. Either they are misjudging how this scandal is going over, or I am. Judging from what it seems to be doing to Governor Culver’s poll ratings, they should be worried.

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