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.

Branstad the Butcher

Gov.-elect Terry Branstad has made it clear he doesn't like all the extravagant programs Gov. Chet Culver has sunk state money into during his term in office. There's preschool offered free to anybody who wants it, without regard to their financial need. There's the taxpayer expense of bonding to pay for the I-JOBS flood recovery and infrastructure initiative. It'd be better to reduce those high corporate income taxes if you want to attract jobs to Iowa.
But don't go so far as to offer tax credits to bring jobs related to the movie industry to Iowa. After all, that was at the center of a scandal during the Culver administration.
Then there's Culver's questionable decision to quickly approve state employee contracts without allowing the incoming administration any input. Branstad's really mad about that.
So, the new governor is promising to take a meat cleaver to the current budget as soon as he is sworn into office. Waaay too much fat on the bone in an economically troubled time.
Hopefully, any changes Branstad can push through won't have a negative effect on Iowa's economy. After all, the U.S. Chamber of Commerce ranks it the eighth-fastest-growing in the nation. And a 24/7 Wall St. study ranked Iowa the third-best-run state.
Watch for future appearances of Branstad the Butcher in this blog space. I'm sure he'll be back.