The Iowa Policy Project claims business tax credits are draining the state's budget and predicts the amount of money Iowa allots to those tax credits will grow by 293 percent over a 14-year period.

According to the IPP, the state diverted $75 million in revenue to private pockets using business tax credits in 2007. The number is expected to grow to $295 million by fiscal year 2021. That's an annual average increase of more than 20 percent.

"That is a growth rate that most people would be envious of if you're an advocate of a particular kind of program," said executive director of IPP, Mike Owen.

Peter Fisher, who also works for IPP, said economists have been researching the issue for years, and businesses don't take state and local tax deductions into account when deciding where to locate as much as other issues like location.

He also said Iowa needs to sunset its tax credits because "when you have a tax credit that operates on autopilot like most of our taxes do, nine times out of 10 you're giving companies a tax credit on something they were going to do anyway.

"I don’t know any reputable economist say tax cuts will pay for themselves," Fisher said. "It hasn’t worked in Iowa in the past and I don’t expect it will."

The IPP was particularly hard on a tax credit called the Research Activities Credit during a community meeting in Indianola on Oct. 19.

The credit was designed to help entrepreneurial start-up companies, but 90 percent of all corporate claims in 2016 were made by companies with more than $500,000 in tax credit claims, according to the IPP. In other words, 17 companies ate up $40.4 million (88 percent) of the money allotted for the RAC.

Fisher said four companies took home $5 million plus in 2016 claims. The big players were Rockwell Collins, Deere & Co., DuPont and Monsanto.

"They aren't bad companies, but do they need a renewable tax credit?" Fisher asked. "if you look at the origins of the research credit, there was a good idea there. You get companies in technology to invest in product development and new technologies.

"That, in the long term, is how you establish economic growth," Fisher continued. "But larger companies don't account for much economic growth in Iowa. Now we have a credit that's skewed in the wrong direction. If you just cap that money or cap that refundability at some level, you will save a lot of money."

Owen said if a company gets a tax credit worth a million dollars, but they only owe $500,000 in taxes, the state is sending them a check for the remaining half-a-million dollars.

Most of the companies using this credit, he said, don't even pay income taxes because they target out of state buyers.

"They are taking advantage of this and why wouldn't they?" Owen asked. "They make hundreds of thousands of dollars in profits every year, do they really need $10 million from Iowa to do research they were going to do anyway?"

The Iowa Policy Project is a non-partisan organization with a mission to help Iowans "sort fact from spin so they can talk to their legislators about the issues that affect them."