By: Maya Marchel Hoff
Source: Moline Dispatch and Rock Island Argus, Ill. (TNS)
Deere and Co. would have to give back money from state tax credits after it laid off workers last year under a bill in the Iowa House.
Advanced by lawmakers on a House Ways and Means subcommittee Thursday, House Study Bill 306 would require businesses that implemented “mass layoffs” in 2024 give back money from the state Research Activities tax credit, which businesses can earn for qualified research and development investments.
Republican Rep. Derek Wulf, of Hudson, who chaired the subcommittee, said the tax credits need to be reviewed and said the layoff threshold for taking back the tax credits is high.
“This bill is, I think, the definition of an America first and Iowa first type of bill,” Wulf told the Quad-City Times. “Unfortunately, we’re seeing some of those jobs leave the state of Iowa, whether that be for a multitude of different reasons, the biggest concern being those jobs being exported to other countries.”
President Donald Trump threatened Deere with a 200% tariff if they moved their production to Mexico last year while campaigning for the 2024 election.
Less than 5% of Deere’s U.S. sales are manufactured in Mexico and more than 75% of all sales in the United States are from U.S.-based facilities as of last September, according to Deere.
During Deere’s 2022 layoffs, it announced that work from the 250 jobs at the Waterloo would be moved to Ramos Component Works in Mexico, which was completed last year.
In 2024, Deere laid off around 1,600 workers, including hundreds at the Waterloo and Davenport plants.
This year, the company most recently laid off 75 employees at its Ottumwa Works and will lay off 119 workers at its Ankeny plant across March and April.
Deere has cited declines in customer orders, drops in revenue and uncertain market conditions as reasons for its recent layoffs.
The legislation would be retroactive, with a start date of Jan. 1, 2024.
Under the legislation, companies that laid off 1,500 or more workers would have to return 50% of the money received from the Research Activities tax credit. Companies with layoffs between 1,000 and 1,500 would have to give back 25% and layoffs of fewer than 500 workers would require giving back 6.25%.
R&D “separate” from market moves: Deere
Deere said decisions to lay off workers when market conditions are tough are “completely separate” from research and development activities, highlighting that the company invests $2.5 million in research and development every day with half going to Iowa.
“The message this bill sends is very concerning,” a representative for Deere and Co. said in a statement to the Quad-City Times. “Companies that operate in cyclical markets such as agriculture or construction inevitably face downturns in the economy. Layoffs unfortunately are not uncommon during these times. Knowing that any R&D for which you may claim a credit will be unfairly penalized if layoffs do indeed occur makes for very difficult business decisions.”
In 2023, Deere was the top recipient of research activity tax credits in Iowa, earning $15,198,541, according to the Iowa Department of Revenue. Deere did not earn over $500,000 from the tax credit in 2024.
Business associations opposed the bill, arguing that it would deter companies from investing in research and development in Iowa.
“We believe that Iowa needs to have a competitive tax policy, and we believe coming after businesses that are already facing economic headwinds if they’re doing the research here in Iowa and they’re earning the credit, then that should be honored and not reduced just because economic factors outside their goal are driving other decisions in business,” Nate Ristow, representing the Iowa Taxpayers Association, said during the subcommittee.
Rep. David Jacoby, a Democrat from Coralville, said he supports taking a look at tax credits but is concerned about the retroactive part of the bill.
“There is chaos in the economy right now, I think the last thing we need to do is take away research as a cornerstone or business development in Iowa,” Jacoby said. “I’m pissed as much as anyone about layoffs, and that’s why we have those bills concerning unemployment insurance and retraining right now.”
The subcommittee moved the bill forward with Wulf and Republican Rep. John Wills, of Spirit Lake, singing [sic] on.
Quad-City Times reporter Gretchen Teske contributed to this report.
This article has been updated.
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