The year for tax reform?

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By Nate Willems


Commercial property tax reform looks to be a high priority issue in the Iowa Legislature this year — again. This issue has been debated long enough and both parties have been consistent enough in their approaches that it is hard to see anything new in the property tax discussion. Why should this year be any different?

However, there is some possibility that a deal could be struck, and if that takes place, it will be for one primary reason: Senate Democrats took Republicans’ best shot in November but are still in the majority.

Cutting property taxes is a core Republican priority. Being able to fund public services such as education, mental health and public safety is a core Democratic priority. So, when Democrats come to the table interested in cutting commercial property taxes, that desire is balanced against making sure that those cuts do not compromise basic public services. Republicans believe they exist to cut taxes, period.

Over the past two years, a Republican Iowa House and governor have proposed a massive cut, up to 40 percent, in the amount of valuation all commercial property is taxed. Senate Democrats have countered with proposals funded by the state through commercial property tax credits. The Republican plan would come out of local governments’ existing budgets; the Democratic plan would come out of the state’s budget.

Compromise continues to be possible. If Iowa Republicans had been willing to acknowledge Democrats’ perspective that balance must be maintained between tax cuts and local services, a deal could have been struck in 2011 or 2012. The Democratic plan offered hundreds of millions of dollars in commercial property tax cuts, but Republicans left that offer on the table.

It may have made some sense politically. Senate Democrats clung to a 26-24 majority after the 2010 elections. Considering the specific Senate seats up for election in 2012, Iowa Republicans were confident in taking a majority of the Iowa Senate. So, why compromise? If you are confident that in 2013 you will get everything you want, why accept half a loaf in 2011 or 2012?

A funny thing happened in November, though. Iowans re-elected a Democratic Senate.

That brings us back to commercial property tax reform in 2013. If Iowa Republicans can give up “betting on the come” and adopt a view that some commercial property tax cuts are better than no commercial property tax cuts, there is a deal to be struck. However, that deal will not be much different from what could have been reached in 2011 or 2012.

l Nate Willems is a Lisbon attorney and a former Democratic state legislator. Comments:

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