A big difference is developing between Governor Chet Culver and his Republican opponents when it comes to creating jobs in the state. A month ago, Culver urged the state Racing and Gaming Commission to grant four more gaming licenses. The rationale that Culver used was that the four new casinos based in Lyon, Webster, Tama, and Wapello counties would help create jobs.
If having a governor that resorts to expanding gambling to create jobs wasn’t bad enough, the City of Fort Dodge let city employees go to a rally in support of the Webster County casino while on the taxpayer’s dime. With the state and local governments trying to deal with tight budgets, it’s shocking that Fort Dodge taxpayers are being asked to pay city employees to attend a gambling rally. I wonder if city employees will get paid to attend the next Culver campaign stop as long as he is promoting his I-Jobs initiative?
While the actions of Governor Culver and city leaders in Fort Dodge are disappointing, it does underline the need to create new jobs in Iowa. Iowa’s unemployment rate stands at 6.7%, the highest level in 20 years. With nearly 112,500 Iowans out of work, the top issue on people’s minds is jobs and the economy.
When former Governor Branstad announced his comeback bid for his old job in January, he pledged to help create 200,000 new private sector jobs for Iowans. Yesterday, Branstad unveiled his plan to help create those jobs while speaking to small business owners in Ankeny.
Branstad’s plan is two fold. He first wants to reduce commercial property taxes in the state to less than the average of other states in our region. The policy paper that the Branstad campaign sent out yesterday points out that a commercial property valued at $500,000 in Des Moines is taxed higher than a similar property in New York City, Chicago, Kansas City, or Philadelphia.
Branstad provide other examples, too. For instance, an eastside Des Moines apartment complex valued at $1.46 million will pay over $66,000 in property taxes this year here in Iowa, whereas a complex located in the Soho area of Manhattan, valued at $6.7 million, will pay annual property taxes of about $33,000.
Similarly, commercial property taxes in rural Iowa are equally non-competitive according to Branstad. A commercial property valued at $100,000 in Hampton would pay more tax than similar property in Glencoe, Minnesota, Sidney, Nebraska, or Viroqua, Wisconsin.
The examples that Branstad shared are startling. To think that a commercial property in Manhattan that is worth four-times as much as a property in Iowa pays half the taxes as an Iowa business is beyond comprehension.
Branstad is also proposing to cut the state’s corporate income tax rate by fifty percent. Iowa has the highest marginal corporate income tax rate in the nation. Even after accounting for the 50% deduction from federal taxes, Iowa’s corporate tax rate is still the highest in the Midwest.
Branstad’s plan is well thought out. As we saw with Culver’s 10% across the board cut, we know what happens when local governments face immediate reductions in revenues – they increase property taxes.
To pay for his proposal and not force local governments to raise residential property taxes, Branstad would phase in the changes. One way he would do this is by taxing new commercial properties at 65%. This would not reduce revenues to local governments since these properties were not taxed before.
Branstad would also cushion the impact to local governments by phasing in the reduction on existing commercial property over a number of years, which would probably be a four or five year phase out. This was the same approach that used to eliminate property taxes on machinery and equipment in 1985.
While Branstad has forwarded the most detailed plan to date, his primary opponents are also in favor of making changes to Iowa’s corporate tax rate. Rod Roberts, has advocated for the elimination of all corporate income taxes, a position he has advanced since becoming a candidate. Roberts filed a bill in January that would have repealed the state’s corporate income tax, but the proposal didn’t go anywhere in the Democrat controlled legislature.
When asked about Branstad’s plan, Vander Plaats told the Des Moines Register, “I think what people are seeing is that is more politics as usual.” Vander Plaats also called the plan “lukewarm,” and said that he would eliminate all corporate income taxes.
Vander Plaats’ reaction to Branstad’s proposal is interesting since he has yet to offer any detailed plan to reform taxes and stimulate job growth. Vander Plaats has been running for governor since Branstad left office, and his statement to the Register that he would eliminate corporate income taxes is the most detail he has offered on reforming the tax code since first becoming a candidate in 2001.
Vander Plaats’ website does advocate for the reduction of property taxes to fuel business expansion and job opportunities for Iowans, but he fails to offer any indication of what that would look like under a Vander Plaats administration.
Whether or not you support Branstad’s proposal, he at least deserves credit for offering detailed proposals describing how he would accomplish his priorities.
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