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The Week In
Review
April
14, 2000
E-mail: jvanfos@legis.state.ia.us |
Session Week
14
Fax: 319-355-9954
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It’s Tax Time! Remember, Governor Vilsack
Wanted To Eliminate Federal Deductibility
Federal taxes are do this Monday, April 17th,
and I thought it would be a good time to revisit an article that
appeared in my news letter this past January. We should not forget
that Governor Vilsack wanted to eliminate one of the most
important tax deductions for Iowa families, Federal Deductibility.
Governor Vilsack proposed a complete
elimination of your right to deduct federal income taxes you pay
from your Iowa return. Federal deductibility is the second largest
deduction from state taxes for most Iowans.
Why would
the Governor want to impose a tax on a tax? Tax simplification. We
need not look far for a painful reminder of what happens when you
trade lower tax rates for elimination of deductions, recall the
federal "Tax Reform Act of 1986", we lost the right to
various deductions for lower rates. This reform was short lived.
In 1990 and again in 1993 the income tax rates were raised not
once, but twice.
It would be practically impossible to create
tax brackets that hold all taxpayers harmless. The Governor’s
proposal could cause significant tax shifts and many Iowans would
face higher income tax payments.
Additionally, there is no long-term protection
that would prevent politicians from raising income tax rates in
the future.
Federal Deductibility is too important of a tax
break for Iowans and should be kept in our tax code. Elimination
would be a bad idea.
Remember your state taxes are due on May 1st.
If you need to contact the Iowa Department of Revenue and Finance
call: 1-800-367-3388
Tax Freedom Day ®
April 6, 2000 – A data revision published
March 30th by the Bureau of Economic Analysis (BEA) has
changed the calculation of Tax Freedom Day.
Periodically, BEA publishes a comprehensive revision of the
National Income and Product Account tables, implementing new
statistical techniques and changing various definitions of income
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taxation. The new methods are then applied
retroactively to historical data.
As a result of the charges, Net National Products
(NNP) is now significantly higher. The Tax Foundation believes NNP
to be the most appropriate measure of income available, and
therefore we have revised our calculation of Tax Freedom Day. Last
Year, for example, the older methods yielded a calculation of 1999’s
Tax Freedom Day as May 11, but the new data revises that downward by
eight days to May 3. This represents a change in 1999’s total tax
burden from 35.7% to 33.5% of income.
Look for a press release the week of April 10-14
when the Tax Foundation will release its national and state-by-state
estimates of Tax Freedom Day for the year 2000, at www.taxfoundation.org.
Ways & Means
Update
Bills Passed in the House this week:
HF 2562 A
bill relating to the treatment for sales and use tax purposes of
sales where the substances of the transactions is delivered by
electromagnetic waves, digitally, or by way of cable or fiber
optics, the exemption from the sales and use taxes of the
furnishing, sale, or rental of information services.
Bills Assigned in the Ways & Means Committee
This Week:
HSB 786
A bill increasing the deduction for pension or retirement income for
the purposes of the state individual income tax, and including an
applicability date provision.
HF 7 A bill for the elimination of the
state inheritance tax and providing for the Act’s applicability.
HF 2575 A bill providing financial
assistance to communities and school districts by creating a school
infrastructure program and fund, continuing the community attraction
and tourism development program and fund, creating a vision Iowa
board, creating a vision Iowa program and fund, providing bonding
authority to the treasurer of state, and exempting certain income
from taxation.
You can track these bills on the Internet at: www.legis.state.ia.us
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Week
in Review Archives
04-21-00
04-07-00
03-31-00
03-24-00
03-17-00
03-10-00
03-03-00
02-25-00
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