DES MOINES — Iowa’s big-city business leaders called Wednesday for a simpler, flatter income tax system for residents and businesses, and more money from a higher gas tax or some other revenue source to make needed upgrades to roads and bridges around the state.
Leaders of the Iowa Chamber Alliance, which represents business interests in the state’s 16 largest urban areas, say that the state’s complicated income tax system for individuals and corporations is hard to explain to businesses looking to locate in Iowa. Deteriorating infrastructure also hurts business recruitment efforts, they said in outlining their priorities for the 2014 legislative session.
“Iowa’s road system requires immediate attention,” said Kelly Halstead, the economic development director for the Greater Fort Dodge Growth Alliance. She said her nonpartisan group supports new or alternative sources of revenue, including a fuel tax increase.
Alliance leaders also said they support efforts to simplify and reduce income taxes. That would include the option of creating a “two-lane” approach to tax reform that would allow businesses and individuals to choose to file under the current system or use a filing alternative that would be simpler, with lower rates and fewer deductions.
“Although there has been progress on several fronts, there is still room for improvement. Iowa’s tax system remains a barrier to economic growth,” said Dan Culhane, the Alliance chair and president of the Ames Chamber of Commerce.
Steve Firman, the director of government relations for the Greater Cedar Valley Alliance and Chamber, said Iowa ranked 40th among states in the Tax Foundation’s 2014 tax climate comparisons because it is difficult to explain the complexity of federal deductibility that skews Iowa’s true rates.
“In economic development, if you’re explaining, you’re losing,” he said.
Culhane said the alliance believes growth can be achieved with competitive and fair taxes, responsible stewardship of taxpayer dollars, necessary investments in the full spectrum of infrastructure, forward-looking programs that provide incentives to entrepreneurship and attract investment, and a predictable and responsive regulatory environment.
Iowa Chamber Alliance executive director John Stineman said 2013 was a landmark legislative session that produced significant property tax, education and health care reform. It also showed that the politically divided legislature, where Democrats control the Senate and Republicans lead the House, can work together to accomplish big things.
“Certainly, there are a lot of signals being sent that it might be a shorter or less-ambitious session (in 2014), but that doesn’t mean that the issues that need to be addressed won’t be addressed,” he told reporters. “If there can be a bipartisan solution, I think that they’ll take that opportunity. I’ve never seen a legislator or seen a politician that would turn down an opportunity to have another thing to take credit for.”
Stineman said the need to address a $215 million shortfall in transportation funding is a difficult issue that will require a multi-year solution, but, he added, “There’s also no chance that this issue is going to go away, and perhaps a divided legislature in an election year is a good time to get this done.”
Along with the tax issues, alliance members pushed for efforts to address significant gaps between the skills sought by Iowa employers and those of the state's workforce by bolstering career-readiness programs, as well as keeping the focus on recruiting and retaining talented educators and improving the state’s education system.
The alliance also urged Iowa policymakers to undertake a concerted effort to attract broadband investment, regardless of the platform, from local, regional and national providers in order to put infrastructure in place to facilitate future economic growth. The 2014 agenda also called for state job-creation incentives of $25 million to attract highly competitive projects and continued support for leveraging federal dollars to invest in passenger rail in Iowa.
The Iowa Chamber Alliance is made up of chambers of commerce and economic development organizations in Ames, Burlington/West Burlington, Cedar Rapids, Council Bluffs, Des Moines, Dubuque, Fort Dodge, Iowa City, Marshalltown, Mason City, Muscatine, the Quad- Cities, Sioux City and Waterloo/Cedar Falls.