Democratic lawmakers are shepherding a bill through the legislature to give big breaks to computer giant Microsoft in hopes of luring the company to open a facility here. Yet statehouse Democrats appear unwilling to extend the tax break to Iowa businesses that’s included in the federal economic stimulus package.
House Republican Leader Christopher Rants of Sioux City says if the break were copied in state tax law, existing Iowa businesses would save 33-million dollars. "Failure to do so will be harmful to those businesses. They’ll have to keep two sets of depreciation schedules and they may find that they actually have to pay a tax on the tax break that the federal government game them," Rants says. "That puts us at a competitive disadvantage with our neighboring states."
House Speaker Pat Murphy, a Democrat from Dubuque, says Iowans will not pay state taxes on those federal rebate checks headed their way, but Murphy suggests the state can’t afford to be as generous as the feds when it comes to the business tax break for equipment depreciation. "We’re not like Washington, D.C. We can’t print money," Murphy says. "…We are going to be fiscally responsible. We’re going to be prudent. We’re going to look at what we can afford to do and what not to do."
Murphy says Democrats who control the legislature’s agenda will make a decision about that business tax break "later" — perhaps as late as 2009. "We’re not going to make any guarantees at this point," Murphy says. "…Stay tuned."
Rants, the Republican leader in the Iowa House, says "later" isn’t good enough for Iowa businesses. "People are going to need to know fairly soon how their expenses are going to be treated for the coming year," Rants says. And Rants says if Democrats are willing to extend big tax breaks to Microsoft — one of the largest, most profitable businesses in the world — then they should be willing to give a small tax break to small businesses who are already here in Iowa.
"The Democrats in Washington, D.C. must believe that this is a good thing. The Democrats in Washington, D.C. put bonus depreciation into the economic stimulus package," Rants says. "I would hope the Democrats in Iowa feel just as strongly as their counterparts in Washington do."
Democratic Governor Chet Culver and legislative leaders of both party are scheduled to meet next week to talk privately about Iowa’s response to the federal economic stimulus package as well as a series of proposals that have surfaced to try to stimulate the economy at the state level.