Governor Chet Culver was in the state of Washington yesterday. He was there to meet with executives from Microsoft who have postponed building a data center in West Des Moines. The project would have created 75 jobs.
Governor Culver thinks the project will still move forward. Culver said, “I had a very positive, productive meeting with Microsoft today about their plans for Iowa. In fact, I’ve been assured by Microsoft that it is not a question of ‘if’ but of ‘when’ they move forward with this project in Iowa. They understand Iowa has a great workforce, a great quality of life, and is a great place to do business.”
Iowa is a great place to do business?
Well, if you are Microsoft, that may be true. Just over a year ago, the Iowa legislature passed a bill that would exempt Microsoft from paying a variety of taxes, saving the company millions of dollars. But what are Chet Culver and the Democrats doing to help existing Iowa businesses during this economic downturn?
The quick answer is: nothing. But that answer doesn’t tell the entire story. Culver and the Democrats are on the verge of passing the single largest tax increase in Iowa’s history. The repeal of federal deductibility would increase taxes by $600 million, and Iowa employers will be footing the bill. For all the talk from Democrats this session of wanting to create jobs, they have been hostile to the small business owners who create most of the jobs in our state.
If federal deductibility is repealed, more and more businesses will simply decide to do business elsewhere. Having grown up in a county that boarders another state, I have seen firsthand how Iowa’s tax structure can force businesses and families to leave the state for a more friendly tax climate.
In Clinton, Iowa, it is hard to find a physician who actually lives in Iowa. Many work in Iowa, but decide to live in Illinois for income tax purposes. Yet, they all purchase their groceries and gas in Iowa because we don’t tax food and our gas is cheaper. I think Illinois got the better end of that deal.
Sioux City, Iowa, offers an even more devastating picture. With South Dakota not taxing personal or corporate income, people have made the financial decision to move across the river. Ten years ago, the city of Dakota Dunes didn’t exist, and today, it’s booming. A quick look at their website tells you why.
KEY ECONOMIC ADVANTAGES
· No personal income tax
· No corporate income tax
· No personal property tax
· No business inventory tax
· No inheritance tax
· No local sales tax
If you were a business person in Sioux City, why wouldn’t you move across the river?
Governor Culver and the Democrats need to realize that we cannot tax ourselves to prosperity. Instead we must unleash the potential of our Iowa businesses and allow then to prosper and grow. Until we do that, we will continue to show potential employers that we are closed for business.
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