Our governor held his Monday media confab and was asked about more tax credits for the big Lee County fertilizer concern:
Illinois made us do it. The governor also blames the Legislature for not cutting Iowa's high corporate income tax rate. In particular, he blames Sen. Joe Bolkcom, D-Iowa City, who chairs the Ways and Means Committee and opposes a corporate tax cut. Bolkcom has called the Orascom deal "the worst economic development deal in state history."
"He is a job killer," Branstad said of Bolkcom.
So the Branstad-Bolkcom "Don't Go Breakin' My Heart" duet at the Statehouse Follies is apparently in jeopardy.
Hyperbole aside, it's true that Iowa's top corporate tax rate is the nation's highest, higher than its neighbors. Iowa has four brackets and a tangle of special interest credits that are also strikes against it from a competitiveness standpoint. Businesses like taxes low, but also simple. And it's true that Bolkcom has opposed cutting corporate taxes.
But what's also true is that Branstad has offered just one official plan to cut corporate taxes, and it wasn't a good one. In 2011, he proposed cutting Iowa's top corporate rate from 12 percent to 6 percent, allowing businesses to keep $200 million or more annually. He proposed covering the revenue reduction by jacking up casino taxes.
It went absolutely nowhere. He can blame Bolkcom, but not even the Republican-controlled House took up his plan. The House has passed all sorts of tax cuts in the last three years, but, to my knowledge, not a corporate income tax cut. If one slipped through that I missed, please let me know.
Lawmakers and the governor focused on property taxes, which is understandable. But if Branstad were serious about corporate income taxes, he would have proposed a plan that not only took on rates but that also cleaned out some of the credits and exemptions that make the system complicated. The governor has said that cutting rates would eliminate the need to hand out credits like the ones going to Orascom, and yet, he's never introduced a plan to do exactly that.I don't think a corporate income tax cut is a bad idea. It could improve the state's business climate. But there's probably a thoughtful way to do it that improves competitiveness and simplicity without blowing a five-year, $1 billion hole in the state budget. We'll see if the governor has a plan like that come January.