Iowa property tax reforms would help small business owners
On Tuesday Iowa Gov. Terry Branstad gave his Condition of the State address. In it, Branstad announced a plan that would cost close to $400 million to reform property tax in Iowa - specifically tax on commercial and industrial properties.
"The principles guiding our property tax plan are simple," Branstad said. "Permanent property tax relief, no shift of the tax burden between classes of property, and property tax reduction for all classes of property."
Branstad tried to pass a 40 percent property tax cut last year, but his attempts failed.
This new plan, if passed, will reduce commercial and property tax by 20 percent permanently over a four-year period. The reductions would also provide funding to "local governments to replace 100 percent of the property tax revenue." The current 4 percent cap on valuation growth for residential property and agricultural land will be dropped to2 percent, and applied to all property classes.
Small businesses will benefit the most from these reforms according to Branstad. These reforms could bring more businesses to the state as well.
"I'm in favor of the 2 percent decrease," Sen. Dave Johnson said. "I'm in favor of lowering property taxes, but that requires the state to pay local governments for compensation. It's going to be an expensive venture."
Brandstad's plan would draw from a nearly $1 billion budget surplus the state has.
"We need to still make fiscally sound decisions to ensure that our budget is still sound," Rep. Megan Hess said. "And the decision we make on the state level will certainly impact property tax payers back home. House Republicans would like to see that (surplus) go back to the taxpayers in the form of tax relief."
There is a place to start the debate on property tax reform, according to Sen. Johnson, but education is holding up the legislative agenda.