Reynolds proposes corporate tax cuts
Iowa Republican Gov. Kim Reynolds is proposing corporate tax cuts as part of her tax plan, the details of which were released this week.
In her Condition of the State address last week, Reynolds highlighted the portions of her plan that would phase in a flat 4 percent personal income tax and eliminate the taxes on retirement income. She did not mention proposed corporate tax cuts in her speech.
Reynolds’ bill would gradually reduce the top corporate tax rate depending on how much revenue the state is receiving from corporate income taxes.
Governor’s office spokesperson Alex Murphy said Iowa’s corporate tax rate is one of the highest in the nation.
“There is no doubt that it discourages investment in Iowa, which hurts Iowans,” he said in an emailed statement. “Gov. Reynolds’ plan ensures that total dollar amounts to the state don’t decrease, but it also begins the process of bringing Iowa in line with the rest of the country on corporate rates.”
According to a Department of Revenue memo, analysts estimate the rate for businesses earning at least $250,001 would be reduced from 9.8 percent to 8.8 percent by 2027. And the second-highest rate would go from 9 percent to 8.8 percent.
The 5.5 percent rate for businesses making between $1 and $100,000 would remain the same.
The corporate tax cuts are estimated to cost the state a total of about $300 million over the next five years.
Democratic leaders criticized Reynolds’ plan for corporate tax cuts.
“The governor seems to really like to reward her big corporate donors, but let’s remember that even this corporate tax cut doesn’t help smaller businesses across the state,” said House Minority Leader Jennifer Konfrst, D-Windsor Heights. “It’s only for the largest companies, so another tax cut just for the top.”
House Speaker Pat Grassley, R-New Hartford, said Thursday that House Republicans are crafting their own tax bill.
“We’re going to work off the governor’s bill,” he said. “But again, I don’t think we’re in a position where every single piece of that is agreed to, by any means. We’re going to review what it is. But a lot of our focus right now in our original conversations have been, how can we make sure we lower that personal income tax rate like we’ve been talking about for the last two months.”
Grassley said the focus of the bill needs to be on personal income taxes, with some other things added in. He said changing tax credits for businesses should be part of the conversation around corporate tax cuts.
“Folks that receive the credits and want to have a lower rate, they’re going to have to really lead that conversation, in my opinion,” Grassley said.