Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

IOWA CORPORATE TAXES: A MODEST PROPOSAL

March 27, 2006

The Iowa Revenue Estimating Conference last week issued its latest guess at fiscal-year 2006 state revenues. It's worth looking at just to see where the state gets its money. Of Iowa's $5.23 billion in FY 2005 tax revenue, the corporate income tax contributed only $280.9 million - about 5.4%. Individual income tax receipts were $2.78 billion for the same period.

The proposal to exempt the pension income of seniors from Iowa tax is slated to reduce tax receipts around $200 million annually. Like so many bad ideas, this transparent pandering to a big voting bloc is touted as "economic development."

If they're serious about economic development, here's an idea: repeal the corporate income tax. If they want to make up the lost revenue, they can repeal all of the state's economic development credits at the same time.

The economic development benefits of repealing the corporate tax are obvious. If you are trying to make Iowa attractive to businesses, what's a better pitch: