As soon as Iowa Governor Terry Branstad (R) proposed drastically increasing the tax rate for the state’s casinos, the industry has been livid. The casinos and anyone who has a basic understanding of economics concluded that it would hurt business and result in reduced profits and reduced employment. Now there is a study to back that up.

Governor Branstad’s proposal would tax casinos at a 36% rate, which is a large hike from the current level of 22% or 24%, depending on the casino. Today a study conducted by Harvey Siegelman of the Strategic Economics Group was released, showing just how bad the tax hike would be for the state.

In the report, Siegelman says that the massive tax increase would result in four of the 17 casinos going out of business. Another four casinos would be put in dire financial situations, which could lead to massive layoffs and in the end, perhaps they would have to close as well. That’s quite a difference from Branstad’s position that the casinos make plenty of money and can afford to pay higher taxes.

In addition to four casinos closing shop and another four being put in a severe financial situation, the tax increase would also result in the layoff of 2,600 workers. Because the casinos are required to make charitable contributions but are allowed to modify the amount contributed in the event of a tax increase, the report also states that charitable giving would decline by $17 million.

It will be interested to see how the ever-defiant Branstad reacts to the report. He may simply say it’s biased and can’t be trusted. Though the Strategic Economics Group is considered a trusted an impartial group, the study was commissioned by the Iowa Gaming Association.

Tags: gambling tax, Iowa gambling

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