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So we don't have a 2010 Iowa tax law after all?

April 06, 2011

The bill to set Iowa tax rules for last year for the returns we are filing this month -- and, not incidentally, to pay public defenders who have been unwillingly pro bono since February -- has had a big week. It was amended and passed by the Iowa House last Thursday. The Iowa Senate amended and passed it yesterday, sending it back to the Iowa House, which didn't like what the Senate did, and sent it back. The Senate backed off and passed the House version. So now we can file our returns and the public defenders can get paid, right?

Not so fast. O Kay Henderson reports:

Senate Democrats have accepted a plan from House Republicans for paying the state’s past-due legal bills, but Republican Governor Branstad is still opposed to the idea.
“I was elected to solve a financial mess that was created by bad budgeting practices,” Branstad said Monday.

House Republicans want to give the governor authority to shift state spending from other programs to pay attorneys who’ve been representing clients who can’t afford an attorney and late this afternoon Democrats and Republicans in the Iowa Senate gave up their alternative and decided to go along with that plan. Branstad’s spokesman issued a statement this afternoon, after that Senate action, saying Branstad still believes the proposal would “perpetuate” bad budgeting practices of the past. On Monday, Branstad told reporters there wasn’t extra money in the state budget to shift around anyway.

So now it looks like the Governor will veto the bill. In theory, it seems that shouldn't matter, because the bill passed both houses unanimously, so the veto could be overturned. It's not at all clear that Statehouse Republicans are willing to override a veto by their newly-installed Governor.

What happens then to the tax provisions? As both houses agreed to a coupling of the Section 179 deduction and other tax rules, and agreed to omit bonus depreciation from coupling, the outlines of the ultimate bill seem clear. Yet a bill has to pass, or Iowa's 2010 Section179 limit is $134,000, rather than $500,000. The legislature has not bedazzled with brilliance so far.

Tags: Branstad tax policy.Iowa bonus depreciation.Iowa tax policy.Jason Clayworth.O Kay Henderson.Section 179.SF512.