Session Week 17
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Iowa Growth

Initiative Passes House

All the pieces of the Iowa Growth Initiative are falling into place.  Each of the five initiatives – the Interstate Distribution, Small Business Growth (Subchapter S), New Employment Economy, Community Renewal, and Renewable Fuel – have passed both the House and Senate, and are presently awaiting the approving signature of Governor Vilsack. 

The original idea behind the Iowa Growth Initiative was based upon the desire of Republicans to use Iowa’s windfall from President Bush’s tax relief plan to create a package of economic opportunities for the people and businesses in Iowa.  The expected $8-12 million to be granted to Iowa as a result of the President’s tax cut will only amount to about five dollars per family.  Rather than distributing this small amount to every eligible Iowan, the idea is to instead contribute the monies to the Iowa Growth Initiative, where the state, communities, businesses, and Iowans in general will receive a far greater return. 

The five components that make up the Iowa Growth Initiative are:

The Interstate Distribution Center Initiative

This segment exempts from income tax a business only using facilities in the Iowa to store its goods for 90 days or less.  Currently, simply storing goods that are to be picked up or transported to another state has been interpreted as establishing nexus in the state, and gives rise to taxation. 

Iowa has an excellent location, its due time that we started taking advantage of our good fortune.  By encouraging the warehousing of goods in our state, Iowa can broaden its horizons and begin to reap the benefits – such as additional jobs, new construction, gasoline sales, truck maintenance, and lodging. 

Small Business Growth Initiative (Subchapter S)

This step allows 100% of the federal income tax to be deducted when determining the tax on a shareholder’s distribution (currently, only 50% is deducted).  The businesses that are affected most by this provision are Subchapter S Corporations.  Subchapter S Corporations are small businesses, which are typically family-owned or employee-owned. 

Over the years, investing in the growth of small businesses has pad big dividends for the state in the form of quality job growth and through a substantial amount of revenues brought into Iowa, due to out of state sales.  By providing incentives to these small businesses to reinvest their earnings, Republicans hope to create a more business-friendly environment to foster growth. 

New Employment Economy Initiative (Capital Gains)

Economy Initiative will enable stock options to be effectively utilized within the state. 

The idea is that when stock options are used correctly, they improve productivity, as well as ensure that companies share the wealth of today’s economic boom with al of their employees.  

Community Renewal Initiative

This next step established tax incentives for businesses that make contributions to projects in communities or neighborhoods (i.e., physical revitalization, job training, crime prevention).  This initiative also includes an income tax credit for companies providing an in-house daycare. 

Renewable Fuel Initiative

This final step is a collaborative effort to provide individuals and businesses an income tax credit of 2.5 cents per gallon on ethanol-blended fuel, if those individuals or businesses dispense 60% of the fuel that they end as designated fuel.

Republicans predict that this tax credit will increase ethanol use through the use of incentives, not mandates, while holding the road-use tax fund harmless. 

Legislators Aim to

 Wrap Up Session Next Week

It looks like the Iowa Legislature will be in session for a few more days.  Our hope is to have everything – including the 2002 budget – finished by Tuesday or Wednesday of next week. 

The scheduled adjournment date was April 27^th. Today marks our fifth day of “overtime,” and the legislators – Republicans and Democrats alike – are becoming increasingly eager to start heading home.

Once we reach a budget agreement with Governor Vilsack, the Legislature will be one giant step closer to adjournment.  Fortunately, Republican leaders are making progress on the 2002 State Budget, and expect to reach a compromise by early next week. 

Ways & Means Update

Bills Passed Out Of Committee This Week:

HF 448  An act exempting from sales and use taxes the purchase of coins, currency, and bullion.

HF 704  an act establishing an agricultural sales tax advisory council, and providing for the elimination of the council.

SF 524  an act providing assistance regarding the development of grapes and wine and providing for tax revenue and an appropriation.

During the 2001 Session of the Iowa Legislature, the House Ways and Means Committee passed a total of 49 bills to the floor of the House of Representatives. 

   Week in Review Archives

2001
04-27-01
04-20-01
04-13-01
04-06-01
03-30-01
03-23-01
03-16-01
03-09-01
03-02-01
02-23-01
02-16-01
02-09-01
02-02-01
01-26-01
01-19-01
01-12-01

2000

04-28-00
04-21-00
04-14-00
04-07-00
03-31-00
03-24-00
03-17-00
03-10-00
03-03-00
02-25-00