Iowa Governor Taking Aim At Property Taxes
May 2nd, 2011
Iowa governor Terry Branstad believes that he can spur commercial construction in his struggling state with a step that is bound to be popular with business and homeowners: he wants to cut property taxes by 40 percent on commercial and industrial property while capping taxable values on residential and agricultural property at two percent[1]. The cuts, which are part of House File 691, were approved last week by the Ways and Means Committee and will be debated by the Iowa House this week before potentially heading to the Senate. Senate Ways and Means head Joe Bolkcom is not optimistic about its success from there, saying that the Democrat-controlled Senate and the Republican House and governor are “pretty far apart at the moment.”
Branstad believes that cutting property taxes will resolve a number of issues for his state, including its current near-standstill in commercial construction and plummeting commercial property values. He also believes it will boost residential real estate values. Critics of the bill say that it will hurt local governments, schools, teachers, firefighters and policemen as well as other aspects of county and city government by creating a hole in their budgets that Branstad’s bill will only half fill via government reimbursements. The governor believes that the other half of the deficit would be made up by growth in the tax base.
Iowa’s commercial and industrial property taxes are 50 to 75 percent higher than the states that surround it. They do seem to be a pretty big handicap for growth in the area and have recently been cited as the reason that several large businesses have taken their factories – and their jobs – elsewhere. Do you think that this proposal will work? Should the government reimburse the local governments for the tax revenue lost?
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[1]http://www.desmoinesregister.com/article/20110501/BUSINESS03/105010324/1029/BUSINESS&odyssey=mod|dnmiss|money
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