Branstad won’t recommend tax cut

DES MOINES - Gov. Terry Branstad said Wednesday he doesn't believe the state can afford to cut income taxes right now and won't be making a tax-policy recommendation to the GOP-led Legislature that convenes next week.

However, the governor said he would be open to considering tax policy changes lawmakers may send him that are fiscally responsible and sustainable.

'I think it can be done in future years with a better economy as we did in '97, but at this point I don't think we're in a position to do it right now,” Branstad told reporters at a forum sponsored by the Associated Press. 'Considering the difficult budget decisions we're faced with this year, at this time at least I'm not making a recommendation for a major tax reform this year.”

The state already faces a projected $100 million shortfall in the fiscal year that ends June 30.

'It's certainly something I support and would like to see done,” the GOP governor said, 'but at this point I don't have anything in my program.”

Branstad said he has looked at various options to change Iowa's tax structure to make it simpler and more competitive, but has been challenged to find a 'meaningful” tax relief approach he thought 'was both sustainable in terms of generating the revenue we need for education and other programs, as well as reducing taxes at this point.”

Top legislative Republicans were undaunted by his decision not to call for a tax cut.

'We appreciate the governor's perspective, certainly, and that's probably not going to dissuade us from looking,” said House Speaker Linda Upmeyer, R-Clear Lake.

'No matter what, we have opportunities to approach simplification, doing a lot of other things so we're going to continue doing our job and we appreciate him doing his,” the House speaker said, adding she's not excluding tax cuts. 'I'm acknowledging that the governor doesn't think that's possible. We'll keep looking.”

Incoming Senate Majority Leader Bill Dix, R-Shell Rock, said a fair and competitive income tax system is a key factor in luring new businesses, investors, risk-takers and keeping or attracting new residents seeking career opportunities.

'The income tax is a penalty on hard work, investment, taking risks,” said Dix, who will guide the Iowa Senate agenda when lawmakers Monday convene the 87th Iowa General Assembly. 'Our tax policy should be simpler, should be more easily understood and should reflect the values of hard work and investment - and punishing them less.”

Dix said his 29-member caucus would consider 'everything is on the table” following a 2016 election in which voters indicated they wanted to see changes in the way state government conducts business.

The Shell Rock Republican said he was a freshman House member in 1997 when the GOP-led Legislature and Branstad passed a 10 percent across-the-board cut that marked the last time Iowans saw their income taxes reduced.

'People claimed at the time that the sky would fall and revenue would tank and the truth of the matter is we saw on the heels of that decision some of the strongest growth that Iowa has seen in the past because it changes people's behavior and that's what we really want to do,” Dix told the AP forum.

Branstad said the 1997 tax cut was a significant accomplishment, but added 'that was a different economic time and the state had a significant surplus or balance. That's not the case right now, so I think we have to be cognizant of the financial circumstances the state is facing.”

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