Reynolds wants to ‘keep it simple’ on corporate tax cuts, says optimistic about negotiations

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Governor Kim Reynolds publicly called for lower corporate taxes at a press conference Wednesday and said her plan would send the message that Iowa “is open for business.”

Reynolds’ plan would gradually reduce top corporate tax rates based on the amount of corporate tax revenue the state receives each year. The two main corporate tax rates of 9.8% and 9% would continue to decline until they reach 5.5% to match Iowa’s current lowest rate.

“I try to come up with five-five dishes,” Reynolds said. “There are 11 states today – today – that have a corporate tax rate below 5%. So that’s what I’m saying—every state is very competitive. is what you have to do to be in the game and compete. We are an outlier.

Republican leaders in the House and Senate have said they don’t want to cut corporate tax rates without also cutting some business tax credits. The Senate GOP bill would do both, but the House GOP tax bill does not 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 plans to evaluate the tax credits after this legislative session.

“Let’s keep it simple,” Reynolds said. “Let’s just do what we have to do, then let’s go and compete.”

House Minority Leader Jennifer Konfrst, D-Windsor Heights, noted that Reynolds did not mention the corporate tax cuts in her statehood speech when she spoke about other tax changes.

“We think that’s the wrong way to develop Iowa,” Konfrst said. “We understand that large corporations are going to be the big beneficiaries of this corporate tax cut. Even small businesses will not benefit. So we just don’t think that’s the right direction to go.

Reynolds’ corporate tax cut plan is estimated to cost the state a total of $300 million over the next five years. Democratic leaders say the money should be used to increase funding for schools, although their plan would use $300 million for education in one year.

Reynolds ‘optimistic’ on tax talks

Overall, Reynolds said she’s 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’s proposal to take the local option sales tax statewide and use a portion of the proceeds for the Natural Resources and Outdoor Recreation Trust Fund.

“It’s all on the table,” Reynolds said.

She was at LBS, a bookbinding and packaging company in Des Moines on Wednesday to tout her tax plan. Reynolds was specifically pointing to a portion of his bill that would eliminate taxes on retirement distributions to employees age 55 or older from employee-owned businesses.

This provision, along with the tax breaks for retired farmers and the elimination of tax on retirement income, are found in all three competing tax systems.

The House plan includes Reynolds’ idea to phase in a fixed income tax of 4% over four years. Reynolds did not say whether she would be willing to accept the flat 3.6% personal income tax proposed by the Senate.

The governor’s tax bill did not have a hearing in the Iowa Legislature. The House and Senate advanced their own bills on Tuesday.

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