DES MOINES, Iowa -- On Monday, Governor Reynolds considered whether the state can afford a $2.1 billion tax cut over the next six years.
The tax cut is funded, in part, by changes in the federal tax code and by adding sales tax to some services and products such as Netflix and Uber. Lawmakers hope the cut leads to increased spending and a growing economy
Among potentially raising sales tax, the cut could provide some Iowans with a $300 tax break. However, one Iowa small business owner doesn’t know if that will translate to more people spending money.
"I don’t know that people will have enough spendable income after this bill is done that it will make a difference to me,” said Tom Coleman, owner of Beaverdale Confection. “I hope it does, but I think that what we'll find out is, will be deficit spending for years to come."
Coleman says this tax cut is more catered to "top tier companies." It could reduce tax liability for companies, and is spread out over the course of six years. If signed into law, it would reduce business deductability, in some cases as much as two percent.
Drake accounting professor Stephen Gara said despite the legislature passing the cut, it’s not set in stone. He said, "Some of these tax cuts actually are tentative, really, and they're based on meeting certain revenue projections because obviously they are worried about deficits, so if the revenue growth doesn’t meet certain targets, tax cuts could be delayed."