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GO HOME AND STAY

April 30, 2007

The Iowa legislature has gone home for the year. They leave behind a tax law in even worse shape than the one they found when they started the session in January. Having made some big spending commitments, we shouldn't expect anything better when they return next year.

The principal tax legislation of this session was SF 128, the $1 per pack cigarette tax. This will be an economic development boon to cross-border convenience stores from East Dubuque, Illinois to Princeton, Missouri.

The tax bill that spur the most economic development for those of us who give tax advice by the hour is the tax amnesty bill, SF 580. The bill provides for a tax amnesty to run from September 4 through October 31. It will cover the following taxes:

individual and corporate income taxes; franchise tax; sales and use taxes; hotel and motel tax; local city, county, and school district sales and services taxes; automobile rental tax; equipment tax; petroleum diminution charge; inheritance and estate taxes; motor fuel and special fuel taxes; cigarette and tobacco taxes; and controlled substance tax.

If you think you may have issues with any of these taxes for prior years, it's a good time to discreetly discuss getting your amnesty application in September 4. Taxes paid under the amnesty will be penalty-free, with 1/2 the interest. What? You paid your taxes on time all these years? The legislature appreciates all of us dedicated chumps law-abiding taxpayers.

The legislature also passed sweet tax credits for historic rehabilitation (SF 566) and for film makers (HF 892). Oh, and they rushed through a bunch of tax breaks for Google (HF 912).

Surprisingly, the legislature failed to pass a gas tax increase or a combined reporting requirement for corporations doing business in Iowa.

What's missing? Any effort to make serious improvements to Iowa's dysfunctional, complex, high-rate loophole-ridden tax law. A pathetic effort at property tax relief fizzled at the end of the session. No effort at all was made to lower our high income tax rates or eliminate loopholes. Instead, the legislature is even more committed to taxing its existing businesses and individuals to lure their competitors and subsidize the well-connected. This should solidify our ranking as the worst state for new business startups.

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