- Claim #1: “Iowans are getting a $1,000 average tax cut.”
- This claim only counts the Iowans who are getting a tax cut under the proposal. It ignores the nearly one-third of Iowans who either get no benefit or will actually see a tax increase.
- Over 20 percent of Iowans – one out of five – with incomes over $30,000 will see an average tax increase of nearly $1,000 with this legislation.
- On average, Iowans with incomes under $250,000 will receive a tax cut of less than $500 – less than half of what Republicans claim.
- Claim #2: “This bill gets rid of giveaways to internet companies like Google and Facebook.”
- The bill specifically says the changes don’t apply to companies already doing business in Iowa. That means Facebook, Microsoft, Google and Apple are still eligible to receive tax incentives under the program.
- Claim #3: “This bill cuts back on tax credits.”
- The only credits that are eliminated immediately are the solar energy system tax credit and the ethanol promotion tax credit.
- The solar system tax credit has been successfully used by Iowa businesses and farmers to save money in their operation as they try to remain competitive. This credit has also helped support businesses employing over 700 across the state.
- The bill does make minor changes to the state’s research activities credit program, but those changes are essentially just to restore the program to what its intent was under reforms passed by Democrats in 2010.
- The bill cuts back the High Quality Jobs program and says it will be repealed in the future. We have seen in the past that these sunsets can easily be ignored.
- Also, the overall business tax incentive cap remains the same. This means the state can replace one tax giveaway program with another in the future.
- The only credits that are eliminated immediately are the solar energy system tax credit and the ethanol promotion tax credit.
- The bill cuts corporate income taxes by more than 50 percent. However, those cuts would go almost exclusively to Iowa largest corporations. Half of Iowa’s smaller corporations will actually see a tax increase.
- Cuts in state spending on many programs will result in an increase in property taxes.
- More school districts will be subject to the “budget guarantee” and will rely on property tax increases to balance their budgets. Public safety and mental health service shortfalls will fall back onto local governments who are reliant on property taxes. And Senate Republicans have already started the process to get rid of the commercial property tax backfill, shifting even more costs for local services onto property taxpayers.
Bottom line:
- Contrary to the claims of Senate Republicans, their tax plan is NOT fair to many Iowans, it does NOT make Iowa more competitive with other states, and it certainly does NOT take into account the ongoing budget crisis.
- Iowans understand that the tax plan offered by Senate Republicans must be viewed in light of disastrous tax-cut plans approved in Kansas and Oklahoma, which have resulted in massive cuts to education, public safety and other vital services.
- Iowans also see that this plan by Iowa Senate Republicans will further hamper efforts to train more Iowans for the jobs of tomorrow, to increase family income and to help create more opportunities for our children and grandchildren.