The Des Moines Register this weekend featured an article on an interesting idea that will help jump start Iowa’s economy:

It contributes little to the state budget. No tax would attract business.

Former Mason City Mayor Roger Bang called recently with a “what-if” question about Iowa’s corporate income tax.

Eliminating that tax is something Des Moines accountant Joe Kristan and others have been pushing behind the scenes in recent months, but with little headway.

I told Bang there was zero chance of the Legislature eliminating the tax this year, so most people don’t care what would happen. He agreed, but said people should start thinking about it anyway.

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To kick off the 2010 legislative session, House Democrats sent a message to Iowa taxpayers: the effort to eliminate your ability to deduct your federal taxes paid from your state income tax liability is on the table. In other words, a massive income tax increase is looming.

On January 27, 2010, the House Ways and Means Committee met for the first time of the 2010 legislative session. The meeting was short and to the point. Several bills were assigned to subcommittee, including House File 807 the highly controversial bill to eliminate federal deductibility, and then the meeting adjourned.

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As the 2010 tax deadline approaches, April 15th, the Internal Revenue Service has published a list – on its website www.irs.gov – of tips taxpayers should keep in mind when filing their returns. Individual taxpayers and taxpayers with children may find the following tips useful:

Read the tips here…

House File 2001 – Expands Levy Authority By Up to $380 million
This bill – cosponsored by key Democrats including the Chair of the House Education Committee and the Speaker of the Iowa House – allows Iowa school districts to shift up to $380 million in heath insurance and benefits onto property taxes.

Under current law health benefits for current school employees must be paid for from the district’s general fund budget. HF 2001 allows districts to shift that cost onto property taxes.

Potential Property Tax Impact: $380 million

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Chet Culver’s hype last week about a “big” surprise for K-12 education fell flat.

In his state-of-the-state message, Culver promised to cover just a fraction of the $540 million “promissory note” looming for K-12 funding.

The $540 million hole in the school aid formula for FY11 was created by two across-the-board cuts, one-time TARP money (federal stimulus) money, 2 percent allowable growth and the statewide voluntary preschool program.

Continue reading for a breakdown of the $540 million funding hole…

On January 12, 2010, Governor Culver proclaimed that since his first day in office, he has balanced the budget every day without raising taxes. However, the facts state otherwise. Here is a list of taxes and fees signed by the Governor since taking office.

Taxes and Fees Memo

Americans for Tax Reform and the Center for Fiscal Accountability recently released its 2009 Cost of Government Day report, and its findings are astonishing. According to the report, Americans paid off their share of the cost of government after working 224 days, on August 12th, nearly an entire month longer than it took to pay for the cost of government last year.

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When economic times are tough most American families curtail their spending habits, save more of their hard earned dollars and purchase only the necessities. Government should act similarly, unfortunately for taxpayers it does not. Faced with massive deficits growing at a record pace, federal and state governments are searching for every tax dollar it can find through increased audits, rather than looking for ways to reduce unnecessary spending and make government more efficient.

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This month, the Des Moines Register reported Senate Ways & Means Chairman Joe Bolkcom (D-Iowa City) as being favorable to the idea of reducing tax credits for films produced in Iowa in an effort to reign in the state’s ballooning budget deficit. Specifically, Senator Bolkcom stated, “We’re probably being more generous than we need to be” and that the issue of film production tax incentives needs to be reviewed.

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Big Government Wants More Of Your Money Back!

Since February, House Republicans have been talking to anyone who will listen about the reality of a stealth tax increase creeping up on struggling Iowa families if the legislature failed to act. Unfortunately, the legislature did not act and now Iowans are feeling the pain. Iowa taxpayers are beginning to receive letters from their tax preparers stating they have to pay a portion of their 2008 refund back to the State of Iowa. The reason for this is because the Democrat led legislature didn’t think it was important to adopt changes to the tax code made by Congress in 2008.

Because Iowa tax laws are rooted in federal tax code, each year the Iowa Department of Revenue proposes the Internal Revenue Code Update, legislation to modify Iowa’s income tax code to reflect the changes made to the federal income tax law. Each year as a matter of state public policy the Iowa legislature typically conforms or couples with the changes made by Congress, but the legislature also has the ability to not conform or uncouple. There have been instances throughout the years when the legislature conformed with some provisions and not others. However, it has been at least 20 years since the legislature failed to pass an Internal Revenue Code Update Bill.

Because it is so rare that the legislature fails to pass an Internal Revenue Code Update bill, the Department of Tax and Revenue provided guidance to tax preparers and filers to file returns as if the legislature would couple with the federal changes outlined in HSB 105.

Accordingly, Iowans filed their taxes under the impression they would be able to reduce their state tax liability by taking advantage of many important tax benefits made available to flood victims, college students, parents and teachers. The same tax benefits afforded to Iowans for federal tax purposes. Unfortunately, Democrats thwarted House Republican efforts to consider and pass HSB 105. In fact, a vote was taken to pass the coupling bill in the House Ways & Means Committee in February, but was defeated as all Democrats voted no.

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