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February 2013 Policy Study, Number 13-2


Creating a Fair Property Tax System: Is it Possible?


Cutting Property Taxes



Tax Foundation publishes every year the State Business Tax Climate Index. The 2013 Index has Iowa listed as one of the ten worst states for businesses.[15] Iowa is listed 42 out of 50. The report states the following: “states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with compara­tively high rates.”[16] Iowa has slipped from 41 in 2012 to 42 in 2013.[17]


In order to provide a climate that will promote business growth, which in return will lead to job growth, we have to provide a climate that is made up of lower taxes. You may wonder why consumers should care about the business climate. If businesses pay lower property taxes then prices won’t rise as quickly on goods and services, which will translate into more money in your pocket. Thus a win-win for the economy, as it allows you to spread your money around to more businesses or keep more in your wallet.


If you look at the average pay in Iowa in 1991, it was $19,509 a year. The 2011 figures show us that the average wage is $38,386.[18] The percent change from 1991 to 2011 is a 96.8 percent increase. With the current recession effects still going on, and the fact that we know many workers have not received a raise for the last year, it is clear that the average wage in Iowa is not keeping up with the increases we see in our property taxes. Therefore we have to bring property taxes back in line with the wages that Iowans are receiving.


As you have gathered from this POLICY STUDY, the Legislature can’t just cut property taxes — there are too many hands in the cookie jar. It is a much more complex system than that. We currently have Governor Branstad’s proposal, which he proposed during the State of the State address.




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