The best way to grow Iowa’s middle class is to help Main Street businesses and other employers grow. We’re working on a commercial property tax cut aimed at doing just that. This “Main Street Tax Cut” is an expanded version of the only commercial property tax cut proposal to pass a chamber of the Legislature with overwhelming bipartisan support.
Commercial property owners currently pay taxes on 100 percent of the assessed value of their property. That’s about twice what residential property owners pay.
We’re working on a plan to provide a 40 percent commercial property tax cut for 80 percent of Iowa commercial properties. Most of the benefit goes to our local small business owners, the biggest job creators in Iowa communities. And it is accomplished without increasing taxes on residential property owners or harming local schools and public services.
The “Main Street Tax Cut” compares favorably with Governor Branstad’s proposal of a 20 percent across-the-board cut in commercial property taxes. The governor’s plan costs much more but provides less property tax relief to almost all Iowa commercial property owners. That’s because it pours tens of millions of dollars into the bank accounts of large out-of-state corporations.
Under the Main Street Tax Cut, we’d put $50 million a year into a new Business Property Tax Relief Fund beginning July 1, 2014. The permanent, on-going appropriation will grow by $50 million each year that the state’s revenue increases by at least 4 percent. Once the $250 million goal is reached, the annual investment will be maintained.
Over the years, Iowa’s local property tax system has become a serious barrier to creating jobs and bringing new businesses to the state. The Main Street Tax Cut does not reduce commercial property taxes by shifting the burden to residential property owners or by cutting funding to local schools. State dollars will replace every property tax dollar that used to go to schools, local governments and community colleges. That means this plan does not force an increase in residential property taxes.
Local business owners and community leaders have made it clear that they wholeheartedly support a bold effort to cut commercial property taxes for every business—a tax cut that helps small businesses the most and grows Iowa’s middle class.