Commercial Property Tax Relief
Issue Overview: Both Gov. Chet Culver and legislative leadership campaigned on reducing commercial property taxes during the 2006 elections. Politicians on both sides of the aisle understand that Iowa's commercial property taxes are not competitive with surrounding states, and in rural Iowa many retail shops cannot afford to stay in business. According to the National Taxpayer's Conference 2005 50 State Property Tax Studies, Iowa ranks 5th highest for commercial property taxes in urban areas and 6th highest for rural areas compared with all 50 states.
Sometimes studies simply are not enough evidence for legislators to push for change. One company, Wilson Trailer of Sioux City, manufactures truck trailers. They have a plant in Sioux City and Yankton, S.D. The company's CFO Larry Countryman indicated in a recent newspaper interview that the company is planning to build a third plant. He told House Speaker Pat Murphy (Dubuque) that he pays twice as much in property taxes in Iowa than in South Dakota. Given this inequity, Iowa is no longer in consideration to receive the new plant. With both the statistical evidence and stories from Iowa-based companies like Wilson Trailer, legislators from both parties are interested in providing relief.
NFIB Position: NFIB has heard from its members about the devastating affects of high commercial property taxes for many years. Recently NFIB has supported legislation to include commercial and industrial property taxes in the "roll back" giving businesses the same reduction in property taxes that residential taxpayers enjoy. Finally, NFIB has a long-held belief that Iowa has more local government infrastructure than it can afford. We have a spending problem and that should be part of any property tax reform.
Issue Status: Gov. Culver in his budget address in January set aside $25 million for a one-time immediate relief for all commercial property taxpayers. His idea is to provide a $250 income tax credit for those filers owning commercial property. No bill has been introduced at this point in time.
Also, Rep. Phil Wise (Keokuk) is leading a subcommittee on commercial property taxes and that committee is meeting every Monday at 11:30 a.m. at the capitol. This committee is reviewing the structure of Iowa's system rather than an appropriation.
