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Iowa Governor Terry Branstad has made it very clear that he prioritizes corporations over working families. Earlier this week, the Governor vetoed a slight increase in the state’s earned income tax credit (EITC) from 7 to 10 percent of the federal credit. The EITC is one of the most effective and popular anti-poverty programs states can offer, but Branstad has insisted that Iowa’s “limited budget” requires a single-minded focus on slashing business taxes instead.

The Governor’s veto letter makes his reasoning crystal clear, saying “Iowa should instead focus its energies on improving our state’s long-term competitive tax position for new job creation.”  The letter goes on to explain that in Branstad’s mind, this means that corporate income taxes and commercial property taxes must be slashed.

In an effort to fulfill Branstad’s vision, legislation was introduced Wednesday that, when fully phased in, would allow businesses to shelter a full 40 percent of their property’s value from the property tax (by assessing commercial property at only 60 percent of its actual value for tax purposes). When fully implemented, the price tag for this measure is about $500 million.  

Many local officials are wary of the proposed change since local governments are heavily dependent on the property tax to fund their day-to-day operations.  The state has promised to replace the revenue localities are sure to lose as a result of this legislation, but most would prefer to have control over their own revenue streams. Making matters worse, House Ways and Means Committee Chair Thomas Sands has acknowledged that “the state doesn’t always honor its commitments.”  

The Governor has chosen to favor corporations over middle class Iowans. What remains to be seen is how far the state’s legislature is willing to go to give handouts to corporations while working families struggle.