A controversial tax proposal has resurfaced at the statehouse, a proposal business groups staunchly oppose. Supporters say closing what they call a “loophole” in Iowa’s corporate tax system could yield as much as $100 million more in taxes for the state.
The legislation is aimed at so-called “big box stores” like Target and Walmart and it would require multi-state corporations to pay taxes on a greater share of sales. Senator Pam Jochum, a Democrat from Dubuque, says the proposal evens the playing field for “Main Street, Iowa.”
“If we truly believe our rhetoric and the rhetoric is that small business is the economic engine of our state and our nation — they are the ones who are creating the jobs and keeping people employed — then we ought to be doing something to make sure those small businesses who are doing most of their business within the borders of our state are not being unduly taxed when someone else is not paying their fair share,” Jochum says.
But business groups warn major Iowa employers like John Deere could be hit, too. John Gilliland of the Iowa Association of Business and Industry says legislators should be trumpeting the state’s current tax climate rather than trying to change it.
“So that Iowa doesn’t have just two Fortune 500 companies, but that we could aspire to have more business growth here rather than less,” Gilliland says.
Iowa Taxpayers Association president Ed Wallace says if the bill becomes law, some businesses may decide they no longer want to operate in the state.
“We’ve got a 115,000 unemployed folks (and) 6.7 percent unemployment,” Wallace says. “I think sending a message to some of Iowa’s largest employers that the state wants to take a look at changing our tax structure for the purposes of ‘revenue enhancement’ is certainly the wrong direction way to go.”
Jochum, one of the legislators who’s pushing for the change, doesn’t buy the argument that businesses will leave Iowa if this particular tax change becomes law. Jochum says 23 other states have a corporate tax structure similar to the one she’s proposing.
“We would have seen tremendous migration from all of the border states of Iowa whether it was Minnesota or Illinois or Nebraska or, now, Wisconsin — all of whom have combined reporting all of who have had it for 30 years with the exception of Wisconsin,” Jochum says, “and I haven’t seen a huge migration from Nebraska, Minnesota, or Illinois into our state.”
Jochum’s bill, however, faces an uphill battle at the statehouse. Former Governor Tom Vilsack and current Governor Chet Culver have both pushed for the change, but it has never passed the legislature.