Iowa Senate Democrats offer 'business friendly' property tax cut

Majority Democrats in the Iowa Senate offered a plan today aimed at reducing commercial property taxes in Iowa by $200 million over the next four years.

Under the proposal, the first $30,000 of commercial property would be taxed at the same rate as residential property – or slightly over 50 percent as opposed to the current 100 percent assessment.

Sen. Joe Bolkcom, D-Iowa City, chairman of the Senate Ways and Means Committee, said that would equate to about $600 in relief for all owners of property valued at $30,000 or higher.

The permanent, ongoing state appropriation to finance the commercial property tax relief would total roughly $50 million annually until the goal of $200 million was reached. Bolkcom said the relief would be provided in years when the state's growth in tax collections was at least 4 percent.

Bolkcom called the approach a “small business friendly” plan.

Senate GOP Leader Paul McKinley of Chariton was skeptical that $600 in tax relief would make a difference for large companies paying tens of thousands or hundreds of thousands of dollars in commercial property taxes in deciding where to locate or expand their operations.

House Speaker Kraig Paulsen, R-Hiawatha, declined comment until he had a chance to review the details of the Senate Democratic plan. He said legislators currently are looking for common areas of agreement between the House, Senate and Gov. Terry Branstad that might form the framework for future discussions.

However, Paulsen noted that Democrats' approach to tax relief usually are “too low.” He said he was fairly certain the 2011 would produce some form of commercial property tax relief, but in what form and what amount remained uncertain at this point.

Branstad has proposed establishing a commercial property tax rate at about 60 percent of the current level for new business startups and expansion, and gradually phasing down the commercial property tax rate for existing businesses over a period of five years to get to a like amount. The governor also proposed to lower and cap the tax rate for agricultural and residential property classes.

House Republicans have approved a different approach that would eventually have the state paying 100 percent of the state school aid formula and would equalize commercial property tax rates with agricultural and residential classifications.