Casino taxes --- Branstad's ace in the hole

Gov. Terry Branstad has made good on a campaign promise to cut the corporate income tax in half. But his budget proposal doesn't ask anyone to put their faith in his "voodoo economics." The proposal, unveiled last Thursday, would allow corporations to keep $200 million more of their profits during the next two years under the theory that they will reinvest the windfall in such a way that it will "trickle down" to the state's unincorporated citizens. That will be sorely needed if legislators embrace another idea of his to cut $194 million from existing programs,  resulting in layoffs of up to 1,500 state employees. Anyway, another provision in the proposal ensures that skeptical legislators wouldn't have to go over to the supply side to embrace this budget. He's steeply raising taxes on a very specific type of corporate entity: casinos. Their tax rate would go from 22 percent to 36 percent, a 14 percent increase. Branstad estimates that the tax increase would raise $381 million in fiscal years 2012 and 2013. That is probably one of the few tax increases the socially conservative base he needs to keep happy wouldn't grumble about. But it's still going to find opposition from casino owners and possibly the charitable organizations that benefit from gambling license requirements to donate a percentage of their profits. The Black Hawk County Gaming Association, which hands out Isle Casino Waterloo's donations, has already sounded the alarm that their contract might be written in a way that a tax increase reduces the casino's contributions. It's still uncertain if the Iowa House or Senate will embrace this component of the budget proposal.