A bill proposed by Gov. Terry Branstad that would dramatically increase Iowa casino taxes has been officially introduced in the Iowa House, although it faces an uphill battle to win legislative approval amid fierce opposition by Iowa’s gambling industry.
The measure, House Study bill 223, would raise state casino taxes to a maximum of 36 percent upon the adjusted gross
Branstad has pledged to use the additional $195 million in state casino taxes to slash Iowa’s corporate income taxes in half in an effort to spur Iowa’s economy and create new jobs.
But a new report commissioned by Iowa’s casino industry contends the governor’s plan would have a devastating negative impact, most likely forcing four casinos to close, while two others would need to close or restructure, and two others would not have sufficient resources to pay their tax liability. Thousands of jobs would be lost, and local governments would lose millions of dollars in property taxes and other tax revenue, the research said.
The report was written by former State Economist Harvey Siegelman of Strategic Economics Group. He also forecast a sharp downturn in Iowa casino revenues if the tax increase goes into effect, dropping from nearly $1.4 billion annually to $712 million because of downsizings and closings.
Branstad has shrugged off the criticism, saying Iowa’s casinos have been crying wolf, although he’s recently been quoted as suggesting he may be willing to compromise on the issue. But casino industry officials suggest there isn’t room for compromise, and Siegelman’s report says the widely held perception that Iowa’s casinos are awash is cash is wrong. He said that four of Iowa’s casinos currently show negative corporate equity and another five had income on their books of less than $10 million – much of which may already be obligated in support of loans.
Branstad’s proposal is further clouded because several non-profit partners of Iowa’s casinos say their share of gambling revenues would be reduced dollar-for-dollar by increased state taxes. That would mean millions of dollars less for charitable donations to schools, libraries, volunteer fire departments and many other community groups.
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Tags: Gov. Terry Branstad, Iowa casinos, iowa house, iowa politics
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