Reynolds wants to 'keep it simple' on corporate tax cuts and says she's optimistic about negotiations
Gov. Kim Reynolds publicly called for cutting corporate taxes at a news conference Wednesday and said her plan will send a message that Iowa “is open for business.”
Reynolds’ plan would gradually cut the top corporate tax rates depending on how much corporate tax revenue the state receives each year. The top two corporate tax rates of 9.8 percent and 9 percent would keep shrinking until they hit 5.5 percent to match Iowa’s current lowest rate.
“I’m trying to get to five-five flat,” Reynolds said. “There are 11 states today—today—that have a corporate tax rate under 5 percent. So that’s what I’m saying—every state is very competitive. Because they know that’s what you need to do to be in the game and to compete. We are an outlier.”
House and Senate Republican leaders have said they don’t want to cut corporate tax rates without also phasing out some business tax credits. The Senate GOP bill would do both, but the House GOP tax bill doesn’t include any corporate tax cuts.
Reynolds said business tax credits are part of the discussion now that they’re in the Senate bill. But she said her office is planning to evaluate tax credits after this legislative session.
“Let’s keep it simple,” Reynolds said. “Let’s just do what we need to do, and then let’s get out there and compete.”
House Minority Leader Jennifer Konfrst, D-Windsor Heights, noted that Reynolds did not mention corporate tax cuts in her Condition of the State address when she talked about other tax changes.
“We think that it’s not the right way to grow Iowa,” Konfrst said. “We understand that big business is going to be the big beneficiary of this corporate tax cut. Even small businesses won’t benefit. So we just don’t think it’s the right direction to go at all.”
Reynolds’ corporate tax cut plan is estimated to cost the state a total of $300 million over the next five years. Democratic leaders say that money should be used to boost school funding, though their plan would use $300 million for education in one year.
Reynolds ‘optimistic’ about tax negotiations
Overall, Reynolds said she is optimistic about negotiating tax changes with House and Senate GOP leaders.
“We’re going to look at all three bills, and we’re going to sit down and see where we end up,” she said.
She was asked about the Senate proposal to take the local option sales tax statewide and use part of the revenue for the Natural Resources and Outdoor Recreation Trust Fund.
“Everything is on the table,” Reynolds said.
She was at LBS, a book binding and packaging business in Des Moines on Wednesday to tout her tax plan. Reynolds was specifically highlighting part of her bill that would eliminate taxes on retirement distributions to employees aged 55 or older of employee-owned companies.
That provision, along with tax breaks for retired farmers and the elimination of retirement income taxes, are in all three of the competing tax plans.
The House plan includes Reynolds’ idea to phase in a 4 percent flat personal income tax over four years. Reynolds did not specifically say if she would be willing to go down to the Senate’s proposed 3.6 percent flat personal income tax.
The governor’s tax bill hasn’t had a hearing at the Iowa Legislature. The House and Senate advanced their own bills Tuesday.