It’s Official: Taxes on the Rise!

From this week’s House Republican Newsletter:

As has been noted in this publication before, something has got to give and it appears that it is not going to be government spending. While the Governor likes to talk of making deep reductions in how state government is funded without increasing taxes, he has recommended the legislature approve the costliest budget in the history of Iowa, a 2.4% increase from Fiscal Year 2009. All on the backs of hardworking Iowans and small businesses. On January 28, 2009, Governor Culver released his Fiscal Year 2010 budget request. In it the Governor advocates for increasing taxes in the following ways:

  • Reduction of the Homestead Property Tax Credit by $49.9 million.
  • Elimination of $2 million designated for the Livestock Producer’s Tax Credit.
  • Elimination of $13 million for the Research and Activities Tax Credit. This credit is equal to 6.5% of qualified research expenditures. The credit is allowed for the portion of the company’s research expenditures that can be apportioned to Iowa. It is a refundable credit in the year claimed, meaning companies receive tax refunds if tax liability does not exceed the value of the credit. Only five states have the refundable component tied to it, a key to keeping quality research and jobs here in Iowa.
  • Placing a cap on the Business Assistance Tax Credit eliminating $15 million from the program.
  • Cutting the amount of state aid for school districts. The current allowable growth rate is placed at 4%. The Governor’s budget recommends the state contribution to equal 2% while simultaneously giving the school districts the authority to spend 4%. This misguided suggestion has the ability to increase property taxes on Iowa families and businesses by as much as $40 million.

House Republicans are approaching the budget process with several questions in mind one of which is; what in this budget encourages employers to invest in Iowa to drive the kind of job creation required to turn this economy around?

Clearly, the answer is not a tax increase on the very businesses making that investment, or on the citizens struggling and working to make ends meet.

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Dansette