Today, Iowa ranks 30th in individual income tax, 49th in corporate income tax and 40th for our overall business tax environment. So it’s no surprise that our economy isn’t growing as fast as it could.
Too often, tax policy is dictated by political favoritism and special interests and the result is a complex tax code that stacks the deck against hardworking business owners and Iowans who play by the rules. Iowa needs to simplify both the personal and corporate income tax systems by eliminating the numerous tax credits, special exemptions and carve outs so that we can reduce the tax burden on individual Iowans and the businesses that businesses that they rely on for employment and an all-around vibrant economy. This current scheme of tax handouts is eroding a full half of our corporate tax base. That’s the equivalent of having to pay your neighbors tax bill on top of your own!
So, why should Iowa reform the tax code to make it fairer?
- Lower corporate tax rates result in greater economic output and increased employment and population growth, creating a larger state tax base. Source: Rich States, Poor States, 5th Ed.
- Lower corporate tax rates can increase tax revenues due to the economic growth they encourage. Source: Rich States, Poor States, 5th Ed.
- Business taxes affect job creation and retention and a business’s location and competitiveness; higher corporate tax rates result in lower wages for employees and higher cost products for consumers. Source: Tax Foundation
- A state’s corporate tax rate is the most relevant tax in the investment decisions of foreign investors. It is time to reduce the corporate tax rate and make Iowa an attractive place to do business. Source: Tax Foundation