Rep. Jamie Van Fossen
The Week in Review
March 7, 2008 Session Week
8
E-mail: jamie.van.fossen@legis.state.ia.us
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IT’S B-A-A-A-A-CK-- $75
MILLION CORPORATE TAX INCREASE BACK ON THE TABLE!
After
announcing two weeks ago that, “Two of Gov. Chet Culver's key proposals (the
bottle tax and combined corporate reporting tax) were declared dead by Democrat
legislative leaders.” [1]
Democrats
in the House Ways & Means committee Wednesday introduced House
Study Bill 715; the $75 million combined corporate tax increase.
Resurrecting a bad idea and harming Iowa job creators.
This
tax increase is being marketed as “closing a
tax
loophole”, and is estimated to bring in more than $75 million in FY 2009. The
estimated revenue is interesting because beginning in Fiscal
Year
2004, Governor Vilsack had recommended the same tax increase, but only used a
$25 million figure in his budgets.
What
is combined reporting?
Combined
or unitary corporate income tax reporting requires a corporation with any
reporting requirement in Iowa to combine all its subsidiaries that are deemed
unitary and file an Iowa return based upon an apportioned allocation of tax
liability to Iowa.
Current
law
Iowa
corporations use separate entity reporting, which allows the Iowa franchise or
income tax to apply to each separate corporation doing business in the state.
These separate entities must file separate tax returns reporting net income.
Combined tax reporting requires that two or more
related
entities engaged in businesses in and outside of
Combined
reporting is a radical change in the way corporate income taxes are calculated.
Currently
16 states, including Illinois, Nebraska, Minnesota, Kansas, and North Dakota,
require combined reporting for affiliated groups of corporations.
Other
states have discretionary authority to require combined reports.
[1]
Mason
City Globe-Gazette, February 14, 2008.
ASSUMPTION GIRLS WIN STATE BASKETBALL
TITLE
Davenport
Assumption girl’s basketball team
finished an un-defeated season with a historic first state basketball
championship Friday February 29th at Wells Fargo Arena in Des Moines.
The
Lady Knights finished a 27-0 season by beating northeast Iowa’s MFL-Mar-Mac
46-27 to claim the Class 2A Champ crown.
Congratulations
to Coach Todd Borrison and the Assumption Lady Knights!
REVENUE CONTINUES TO EXCEED ESTIMATE IN
FEBRUARY- NO NEED TO RAISE TAXES
On
Monday, March 3, Fiscal Services released the monthly
general fund revenue numbers memo through the end of February.
General fund revenue continues to exceed Revenue Estimating Conference
(REC) estimates.
Through
February, total general fund revenue increased by $430 million (11 percent)
compared to actual FY 07. All major
revenue sources of the general fund increased compared to last fiscal year.
Personal income tax revenue continues to drive the revenue growth.
Through February, year-to-date income tax revenue increased by 9.9
percent, or $184 million compared to FY 07.
The REC estimate for income tax is 6.7 percent compared to FY 07.
Payments with returns increased by $22 million, or 62 percent which means
that lowering the withholding tables forced more employees to pay in.
Sales and use tax
receipts received in February totaled $265.1 million, an increase of $22.5
million
Corporate income tax revenue increased by $49 million, or 20.7
percent compared to FY 07. The REC
estimate is only an increase of 5.3 percent.
This means that corporate profits are still strong.
Other taxes were up by $100.6 million, or 48.9 percent compared to
FY 07. The REC estimate is for other
taxes is an increase of 37.3 percent. Cigarette
and tobacco taxes continue to exceed the estimate, which means the majority
party’s stated goal of using the tax to force people to quit smoking is simply
not being attained. We will be
watching to see what the majority party does with the excess cigarette tax
revenue. It is all supposed to go to
health care but likely will just be deposited in the general fund.
Other
receipts were up $30.3 million, or 12.7 percent compared to FY 07.
The REC projects an increase of 1.7 percent compared to FY 07. Judicial
revenue accounted for most of the increase, which is also interesting because
the majority party has built in an increase of $18 million for enhanced
collection of judicial revenue. Since
that enhancement already appears to be happening, most likely “enhancement”
will change to an “increase” in judicial fees and fines.
Despite
the unanticipated revenue growth, Legislative Democrats continue to hide their
intentions on tax increases and spending priorities.
The REC estimates give the Governor and Legislative Democrats plenty of
money to spend but despite that, Democrats chose last week to raise taxes on
hometown Iowa businesses by failing to couple or mirror the federal tax changes
in the federal stimulus package.
CONTROVERSIAL WORKERS’ COMPENSATION BILLS PASS LABOR COMMITTEE
On
March 4th the House Labor Committee approved House
File 743 on a 10-5 party-line vote. HF
743 changes the use of scheduled injuries and allows for additional workers’
compensation payments for an injury resulting in reducing the employee’s
earning capacity by a significant difference in pay.
House
Study Bill 658
was passed by the Committee.
This bill provides that if an employer or insurance
carrier pays workers' compensation benefits on behalf of an
employee, the employer or carrier must
file notice of commencement of the payments with the workers'
compensation commissioner. Additionally,
the bill penalizes a payer if the late payment of benefits results in a worker
being denied medical care.
House
Study Bill 653
was approved by a 10-5 party-line vote. The
majority of this bill deals with out of state workers’ compensation claims,
but easily the most controversial portion of HSB 653 is the last section which
allows the reopening of a settled award/agreement in workers’ compensation
benefits.
Thursday
the Labor Committee passed House
Study Bill 771. House Study Bill
771 is the most controversial workers’ compensation bill of 2008 – this bill
makes changes to the choice of a physician to treat an
injured employee under workers' compensation.
This bill allows an employee to pre-designate a physician for medical
treatment – an employer can only choose the physician for workers’
compensation treatment if the employee has not already pre-designated a doctor.
DAVENPORT CENTRAL BOYS FIGHT FOR THE 4A
BASKETBALL TITLE
Davenport
Central’s “Marshall Maniacs”
invaded Wells Fargo Arena Wednesday night as the Blue Devil boys won their
quarterfinal game against Waukee 60-45 to advance to today’s semi-final round
against Cedar Rapids Kennedy.
I
had the pleasure of watching my alma mater beat Waukee with Davenport
Schools Superintendent Julio
Almanza, and school board members Richard
Clewell, Ralph
Johanson, and Ken Krumwiede.
Good
Luck to Central Blue Devils coach Craig
Wurdinger and the boy’s basketball team in tonight’s game against CR
Kennedy!
Ways
& Means Update
Bills
introduced in committee this week:
HSB 715- An Act requiring combined corporate tax returns for unitary businesses and including a retroactive applicability date provision.
Bills passed out of
committee this week:
No bills passed committee this week.
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(C) JamieVanFossen.com, 2008