Proposed casino tax increase

My bet: Casino tax will rise, with caveats

Written by
KATHIE OBRADOVICH

Branstad, in the budget he presented Thursday, plans to cut the corporate income tax roughly in half. He says he'll pay for that by returning the tax on casinos to 36 percent, up from the 22 or 24 percent they pay under current law.

The tactic will help him counter one of the better arguments that Democrats have raised against Branstad's proposed budget cuts for programs like preschool: He's only doing it to pay for business tax cuts. By paying for the tax cut, dollar for dollar, from revenue increases, he can more plausibly deny he's rewarding corporations at the cost of kids.

But Branstad will face some political pushback from members of his own party to the idea of raising a tax - any tax - even for the purpose of cutting another tax. The governor skirts the charge that he's violating his own no-tax-increase promise by saying he's just restoring the gaming tax to the rate casinos originally agreed to pay back in the 1990s.

The gaming lobby is powerful and well-funded. Branstad acknowledged he's going up against an "army" of lobbyists. They won't give up more tax dollars without lots of sweeteners, probably in the form of looser regulation. Branstad says he's willing to talk to them, but he won't jeopardize the state's integrity.

Some conservatives who look coldly at tax increases might make an exception for casinos. Others may be persuaded by the fact that about 40 percent of casino revenue comes from out-of-staters.