Branstad Vetoes Tax Break for Low-income Workers

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By Aaron Hepker

DES MOINES, Iowa (AP) — Gov. Terry Branstad defended his veto of a tax break for low-income workers Monday, saying his campaign platform called for cutting business taxes to create jobs, not individual taxes.

Branstad said his plan to cut business taxes would help people in the long run and he would continue to push lawmakers to cut commercial property taxes and reduce the corporate income tax.

He told reporters at a news conference that he planned to go to Osage for the opening of chemical company Valent BioSciences Corp., which was creating 89 jobs. Branstad said the state's job-training programs and the availability of raw materials were more important factors in Valent's move to Osage than his planned tax cuts, but "the regulatory and tax burdens are factors that are important."

The company's opening "demonstrates the confidence businesses are seeing during the changes we are making in Iowa," he said.

Democrats have argued Branstad favors businesses over people, and they pointed to his veto of a measure aimed at reducing taxes for lower paid workers as evidence of that. They also noted the tax break for low-income workers was part of a compromise budget plan negotiated with Republicans and Branstad's staff.

The veto eliminated an increase in the earned income tax credit, which goes to lower-paid workers, and Sen. Joe Bolkcom, head of the Senate Ways and Means Committee, said it complicates lawmakers' efforts to wrap up this year's session.

"The governor's slippery statements and lack of good faith bargaining on this issue casts a cloud over his relations with the Iowa House and certainly with the Iowa Senate," said Bolkcom, D-Iowa City.

He said Branstad's staff was in the room when the deal was worked out, but the Republican governor insisted his staff had not agreed to it.

"The earned income tax credit goes to low-income people and provides a supplement to their income," Branstad said. "It isn't necessarily something that creates jobs. I would be much more focused on trying to create more and better jobs so people can move up the ladder."

He said his veto was designed to send a message to Democrats, who have majority control in the Senate that there's "a new day" at the Statehouse

"Senate Democrats need to recognize that you have not only a Republican-controlled House, but a Republican governor who ran on a very clear and specific platform," he said.

Bolkcom said he found Branstad's behavior "a bit disingenuous."

The tax break would have helped 240,000 Iowa workers who earn less than $45,000 a year.

"Iowans are watching and paying attention to this issue," Bolkcom said.

"I think they understand that I'm serious," Branstad responded.

Lawmakers won't receive any more daily expense payments after Friday, and legislators had hoped to end this year's session by then. All sides conceded Monday that wasn't likely because very little of the state's $6.1 billion budget has been approved.

"I don't think it is likely to get accomplished this week," Branstad said. "I'm willing to spend as much time as it takes."

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