Governor Terry Branstad has given legislators a revised plan for raising the state tax on casinos, but it’s getting the same chilly reception from lawmakers and a key lobbying group.

In late January Branstad proposed raising the state tax on all casinos to 36 percent. Now, Branstad suggests a “graduated” tax for the casinos, based on profits, in the same way individuals who make more money have higher tax rates.

“The legislature hasn’t adjourned. Gaming interests have things they want and we are certainly going to continue to look at the whole picture,” Branstad said this morning. “…Remember what the bigger issue is: reducing the overall tax burden for business.”

Branstad has proposed raising the casino tax so legislators then would be able to cut the state’s top corporate income tax rate in half.

Iowans for Tax Relief president Ed Failor, Junior says his group favors lower taxes, period.”Under no circumstance would we support a tax increase of any sort,” Failor says.

Iowans for Tax Relief is running ads against a casino tax increase, calling it a “cash grab” that will wind up in the hands of “bureaucrats” in Des Moines. 

Senator Joe Bolkcom, a Democrat from Iowa City who chairs the Senate Ways and Means Committee, is mystified that Branstad is still pushing for the casino tax hike. “I just don’t see us coming to agreement between all the interests here to do anything on this issue this session,” Bolkcom says. “I just don’t see it happening.”

Branstad says the state’s larger casinos are making “a lot of money” and can afford the higher tax rates. The casinos counter that raising taxes would force lay offs at the casinos and there’d be less money for the casinos to donate to local charities.

Branstad’s new proposal calls for taxing the first $25 million in casino profits at 24 percent. That’s a two percent increase for Iowa’s smaller casinos. On the next $50 million in casino revenue, the state tax rate would be 30 percent. For revenue above $75 million, the tax rate would be 36 percent on the state’s largest casinos. That’s a 12 percent increase.