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House
Passes Income Tax Reform Bill
The
Iowa House of Representatives passed House File 701 this week,
which simplifies the current income tax rates from nine to three.
The bill signifies the fourth and final piece of
legislation in the House economic enhancement plan.
“This
bill would remove 35,000 taxpayers from the tax rolls and
simplifies the system,” noted House Speaker Christopher Rants
(R-Sioux City). “When
you combine this with property tax reform, the Iowa Values Fund
and our business climate enhancement bill, Iowa has just become a
force to be reckoned with.”
HF
701 is contingent upon the ratification of an amendment to the
Iowa Constitution that would require a 60 percent vote of both the
House and Senate in order to raise the rate of the state income
tax, sales tax or use tax.
If
the bill were enacted, essentially, a “flat” three-rate system
would be put forth. The
three rates contained in HF 701 are 1.9 percent for taxable income
of $0-$8,000, 4.5 percent for taxable income of $8,000-$100,000,
and 4.8 percent for taxable income of $100,000 and over.
An
amendment offered by Rep. Jamie Van Fossen (R-Davenport) increases
the filing threshold from its current $9,000 to $11,000 for a
single filer, and from $13,500 to $15,000 for other filers.
Therefore,
the above rates take effect on income above $11,000 for single
filers and above $15,000 for other filers.
“The
current nine-bracket income tax rate is unfair and stifles
economic development in Iowa,” noted Rep. Van Fossen, chair of
the House Ways and Means Committee and floor manager of the bill.
“We sent a clear message to the people of Iowa today:
this is your money, and it is time we sent you some relief.
This is a long overdue system that is fair and simple.”
HF
701 will only take effect after two General Assemblies (80th
and 81st) approve the same Constitutional Amendment,
and the voters approve the Constitutional Amendment.
“Ultimately,
this will empower the taxpayers of Iowa to decide for themselves
to lower their taxes,” continued Rants.
House
Passes Gaming Tax Bill
The
Iowa House of Representatives passed House File 696 this week, a
bill that lays to rest a current case pending in the United States
Supreme Court. The bill would set the tax rate for Iowa's
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casino
tracks at 30 percent on adjusted gross receipts over $3 million.
The rate is subject to a credit on the tax payable in the following
fiscal year.
The
maximum credit allowed to all racetracks is an amount equal to the
total (from all racetracks) 10% of the adjusted gross receipts over
$3 million from each racetrack.
This sets the lowest amount a racetrack would be taxed at as
20%.
"I
worked extensively with legislative leadership and the gaming
industry to reach this compromise," said Rep. Steve Lukan
(R-New Vienna). "This bill does nothing to expand or
contract gaming in Iowa. It is a tax bill. As a result,
we have staved off what could have been a devastating loss in
revenue to the general fund while at the same time protecting the
DRA and allowing it to continue its charitable work in the area
rather than sending more money to Des Moines."
The
plan keeps gaming taxes going into the general fund
as revenue neutral. When the bill becomes law, the
gaming industry will drop the suit it is currently arguing
before the United States Supreme Court.
The
pending Supreme Court case enabled both sides to find common
ground. A loss on the case would have cost the state
of Iowa over $150 million. Under this plan, $210 million would
be guaranteed from gaming tax revenues. As collections go
above and beyond that, the tracks' taxes would go down as the
state's collections rose.
The
bill only addressed the tax portion and no policy issues were
considered regarding further regulation or expansion.
The
bill now moves to the Senate for debate.
Ways
& Means Update
Bills
introduced to and passed out of committee this week:
HF 696-A bill for an act relating to
the payment of taxes and payment of financial consideration on a
contractual basis to the state from adjusted gross receipts from
gambling games at racetrack enclosures.
HSB 318-A study bill proposing an
amendment to the Constitution to the State of Iowa relating to
certain state tax rate changes.
HSB
319-A
study bill relating to the individual income tax by reducing the tax
rates and number of tax brackets.
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