Corporate welfare versus good business sense

The Iowa Progress Project, a conservative group which lobbies for consumer's rights, started running a radio advertisement last week about "corporate welfare." The impetus for the ad was an announcement that Microsoft is creating 50 new jobs in Iowa by locating a new data center there.

The state is requiring Microsoft to invest at least $200 million in the project, and will receive about $50 million in tax incentives in return. The incentive package includes a six-year exemption from taxes on computers, electricity and equipment used in the data center. A similar deal was struck with Google in 2007 to lure the company to Iowa.

Microsoft is planning on building about 24 of these data centers around the country, and of course, competition is fierce to bring the business to a state. Consumer advocates say the $50 million offered to Microsoft is too high, at $1 million per job created. But is it really that simple of an issue?
I have to think that Iowa officials are looking down the road toward the future jobs and economic impact that might be created by Microsoft. If the state isn't actually losing money on the deal, why shouldn't it make strategic decisions that bring in good companies?

Well, there is a basic fairness principle that does come into play. Ordinary people pay their taxes and feel that companies like Microsoft should have to do the same. I don't disagree with that argument, and I think there needs to be a reasonable balance between attracting good companies to a state and making sure that people and companies pay their fair share. Governments around the country have been raising taxes on citizens, and therefore the increased scrutiny related to these special deals seems warranted.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Video: How to Estimate the Value of Clothing for IRS Deductions

Learn how to estimate the value of clothing for IRS tax deductions as charitable donations. The value of clothing donations to charity are based on published lists of retail values or current thrift store prices. List your donation values on the Form 8283 with the help of TurboTax in this video on filing annual taxes.

Read More

Brought to you by TurboTax.com

The Top Tax Myths (and What Happens When You Believe Them)

Don't get caught believing in any of these myths when it comes to your taxes.

Read More

Brought to you by TurboTax.com

Video: What Are Tax Tables?

The tax tables issued by the federal government and many state governments determine what amount of tax you owe based on your net income after deductions and exemptions. See how your tax status affects your position on the tables in this video on tax basics.

Read More

Brought to you by TurboTax.com

How to Use Your Lyft 1099: Tax Help for Lyft Drivers

Whether you drive for Lyft full-time or part-time, you’re now enjoying the pay, perks, and prerogatives of being self-employed—from setting your own hours to building customer relations. With the onset of tax season, you face a new business challenge: filing your taxes in a way that minimizes your tax liability. Follow these tips on how to use your Lyft 1099 to complete your tax return and maximize your tax deductions.

Read More

Brought to you by TurboTax.com
Read Full Story