Iowa House and Senate conference committee negotiators appear to have struck a grand bargain on taxes. I haven’t seen any press release on the agreement yet from Senate Democrats, so I don’t know whether there is consensus in the caucus for the deal. But both Senate Majority Leader Mike Gronstal and Minority Leader Bill Dix are backing the compromise, as is House Speaker Kraig Paulsen.
After the jump I’ve posted commentary on the deal and a memo outlining the details. The bulk of the tax cuts will go to commercial property owners, but I see no evidence that the majority of small business operators (who rent rather than own property) will benefit at all. Democrats are getting the earned income tax credit increase they’ve been trying to pass for years, and that’s an important issue. However, the same vulnerable populations that benefit from the earned income tax credit will bear the brunt of the state and county service cuts that will likely happen as the commercial property tax reductions are phased in.
I haven’t had my eye on property taxes during this year’s legislative session, because I assumed no compromise would be found between the very different bills favored by Iowa House Republicans and Iowa Senate Democrats. A recent analysis by the Iowa Fiscal Partnership showed that the Democratic approach was better for commercial property owners “with less than $622,500 valuation in property,” while larger businesses (such as national retailers or real estate trusts) would do better under the GOP plan. That must-read study also undercut the case for any urgency to reduce property taxes in Iowa.
Any relevant thoughts are welcome in this thread. UPDATE: Added some comments from Iowa legislators and information about a loophole that could disqualify a lot of commercial property from the tax reduction.
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