Jacob Tweedy is a senior in accounting.
“This is the worst economic development deal in state history,” said Sen. Joe Bolkcom. Bolkcom has been a member of the Iowa Ways and Means Committee for 14 years and is challenging Gov. Terry Branstad’s rationale behind the recent tax incentive package given to Egyptian conglomerate Orascom Construction Industries. The package is simple: Orascom will receive up to $550 million in taxpayer subsidies from federal, state and local governments to build a fertilizer plant.
We have learned that $250 million is coming from the state of Iowa and Lee County, implying that the remaining $300 million is coming from the federal government. The $300 million in tax incentives from the federal government comes into play because the site in Lee County, where the plant is being built, is a Midwestern Disaster Area resulting from the 2008 floods. The federal government allows businesses to issue tax-free bonds to build in these disaster areas. It is important to understand the stipulations of this federal aid because the site in Illinois didn’t qualify for Midwestern Disaster Bonds.
If the disaster bond incentives don’t give adequate reason to question Branstad’s actions, there are many other issues that will. For one, the site in Iowa is in the middle of the “Midwest Corn Belt.” With the United States importing approximately 54 percent of its nitrogen fertilizer in 2011, Iowa puts the plant in the optimal position to efficiently fulfill this demand. Another reason behind Iowa being the obvious choice for Orascom, over Illinois, is the economic health of the two states. Illinois is currently facing an unfunded pension liability of $83 billion, where Iowa is expecting a surplus of approximately $688 million in 2012.
With every passing day, Iowa is becoming an increasingly relevant state in this country. Iowans should see conducting business in this state as a privilege instead of enticing businesses with free money.