Dramatically improve Iowa's business climate and spur the creation of 200,000 new private sector jobs for Iowans.
Defining the Challenge
At 6.7%, Iowa's unemployment rate is at its highest level in more than two decades and nearly 112,500 Iowans are currently seeking employment. When Terry Branstad took office in January 1983 Iowa's unemployment rate was 8.5% (a historical high) and when he left office in January 1999 the unemployment rate had dropped to 2.5% (a historical low and the lowest in the nation at that time).
Defining the Solution
Governor Branstad has a proven track record of successful experience in fostering job growth in Iowa. His past efforts focused on hands-on business recruitment and improving Iowa's economic competitiveness. He will once again travel the world in search of new jobs and will take new steps to increase our ability to compete for jobs both nationally and globally.
Small business development is the key to job creation over the next five years and Iowa's income and property tax climate make that development nearly impossible. Simply put, Iowa's business tax climate is one of the worst in the nation and is a serious impediment to job creation and economic growth. The 2010 Business Tax Index1 ranked Iowa's business tax climate at 46th of the 50 states (with 1 being the best and 50 being the worst).
Before Iowa can hope to compete nationally and globally, we must first improve our relative competitiveness amongst our closest neighbors. As such, Governor Branstad has set the following goals as first steps towards creating 200,000 new jobs for Iowans.
GOVERNOR BRANSTAD PROPOSES
1. Reduce commercial property taxes in Iowa to less than the Midwest average
- According to the most recent study2, a commercial property valued at $500,000 in Des Moines would pay more tax than similar property in New York City, Chicago, Kansas City, and Philadelphia. See map for Midwest comparisons.
- For example, an eastside Des Moines apartment complex valued at $1.46 million will pay over $66,000 in property taxes this year whereas a complex located in the Soho area of Manhattan valued at $6.7 million will pay annual property taxes of about $33,000 (more than four times the market value and less than half the total tax).
- Similarly, commercial property taxes in rural Iowa are equally non-competitive. A commercial property valued at $100,000 in Hampton would pay more tax than similar property in Glencoe, MN, Sidney, NE, and Viroqua, WI. See map for Midwest comparisons.
- We should immediately reduce the percentage of property taxes paid on new commercial property. Then, phase down property taxes paid on existing commercial property over a 4 or 5 year period.
2. Cut Iowa's corporate income tax rates in half
- Iowa's top corporate income tax rate is 12% and is the HIGHEST marginal rate in the nation. 3 Even accounting for the 50% deduction of federal income taxes, Iowa's corporate income tax rate is the highest in the Midwest. See map for Midwest comparisons.
1. 2010 State Business Tax Climate Index, Tax Foundation, September 2009. http://www.taxfoundation.org/files/bp59.pdf
2. 50-State Property Tax Study 2008, National Taxpayers Conference, June 2009.
3. Federation of Tax Administrators, March 2010. http://www.taxadmin.org/fta/rate/corp_inc.pdf