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THE WEEK AT THE IOWA STATEHOUSE

February 01, 2008

Iowa's legislature has has finished its first month. Nothing much has happened with the Governor's two big tax proposals, the bottle tax and the combined reporting proposal.

The noise this week mostly has to do with the federal stimulus bill. The governor promised not to tax the federal tax rebates on Iowa returns. He hasn't committed to conforming with the business stimulus proposals, which has caused an outcry on the GOP side. It would be good policy for Iowa to conform with whatever Congress decides. The Department of Revenue still struggles with the effects of Iowa's failure to conform right away with the 2001 stimulus package, and we still get notices from them for clients because the department can't be bothered to read supporting schedules to 1040s that disclose differences between federal and Iowa depreciation.

It would be good if the legislature stopped there on the stimulus front, but there is also talk of doing more with sales tax holidays. These are bad policy for a number of reasons and should be eliminated altogether, rather than expanded. But if Iowa really wants to stimulate its economy long-term, they should try real reform of Iowa's' byzantine income tax.

BILLS INTRODUCED

The bills introduced this week are, as usual, the opposite of tax reform. They include HF 2101, a 25% tax credit for businesses that hire math and science teachers to do math; HF 2102, which freezes property taxes on houses for some old folks, and SF 2084, which creates at least four different tax credits for "Green Buildings." As if people wouldn't save energy when oil is $95/barrel without a 1.4% Iowa tax break.

You can follow the progress of tax bills in this legislative session at our 2008 Iowa Tax Legislation page.

Tags: Iowa tax policy.

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