Less money for taxes means more investment.
Randy Bradley is gradually buying next-generation equipment for the Burger King franchise he owns in Ottumwa, Iowa. The equipment makes his restaurant more energy efficient and his employees more productive, but if legislators enact personal income tax relief, the purchases could happen faster.
“I’m buying as I can afford it. If I’m not paying higher taxes, I can afford to buy it sooner,” Bradley says.
Other small business owners in Iowa agree, and are pushing lawmakers for help. Since many small business owners pay business taxes at their personal rate, rather than a corporate rate, the issue affects them deeply.
State Rep. Tom Sands says a bill in the House, currently in draft form, will propose an option: Residents could pay personal income taxes under Iowa’s current system or under a flat tax. While the rate of the flat tax is still under discussion, Sands said it would be no higher than 6 percent.
“Generally, small business owners think—and I agree—that their taxes are too high and the costs of regulations are too high,” Sands says.
A flat tax of 4.5 percent has been proposed before but failed to make it through the legislature. Iowa ranks fifth-highest among states with a personal income tax, according to The Tax Foundation. The state has nine brackets, and the top rate is 8.98 percent.
Bradley adds that lower personal income taxes would benefit individuals, as well as business owners. “Any time the government has more money, they will spend it.”
