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REHAB CREDITS, TAX BREAKS FOR SOLDIERS ON TAP IN LEGISLATURE

January 30, 2007

Among the new bills proposed last week in the legislature were efforts to make life for soldiers and veterans more tax-free. There was also a bill to expand the amount of Historical Rehab and "Cultural and Entertainment District" credits allowed each year.

The state has a generous credit to subsidize rehabilitation of historic buildings, but it is subject to an annual limit, which has been greatly oversubscribed. This bill, HF 130, would raise the cap from $2.4 million annually to $20 million.

These bills show how legislators look at tax bills as a sort of Swiss Army Knife of public policy - it can do everything, even if not particularly well. They also show how the road to Iowa's dysfunctional and complex tax system is paved with good intentions. Who can be against helping soldiers? Or fixing up old buildings? There's just no end to good causes, though, and ultimately these special breaks mean everyone else has to pay more, and the tax law just gets more complicated.

The rehab credits have another ugly effect. They subsidize one class of rental property at the expense of others. When the subsidized apartments financed by rehab credits hit the market, they compete with unsubsidized conventional apartments - taking money out of the pockets of the unsubsidized landlords. But that's harder to see than a nicely-rehabbed loft.

Follow all of the 2007 Iowa tax legislation at our 2007 Iowa Tax Legislation page.

 • Eye on the Legislature: 2007       Bookmark: del.icio.us • Digg • reddit