From the Capitol with Steve Firman - February 3, 2022
posted on Wednesday, February 2, 2022 in Government Affairs
February 3, 2022 Legislative Update
Tax reform continues to be the primary focus for both chambers of the legislature. Following the governor’s tax proposal released recently, the House and Senate introduced their proposals last week.
House Study Bill 626 was introduced by Representative Hein, chair of the House Ways and Means Committee, on January 27th. The bill is similar to the governor’s proposal but removes the section reforming the corporate income tax rate. House leaders believe that the focus should be relief for individuals, not corporations. Both the Senate proposal and the Governor’s tax plan do reduce the rate corporations pay to the State.
Senate Study Bill 3074, also introduced January 27th, differs from the Governor’s and the House proposals by lowering the individual income tax rate to 3.6% with a plan to eliminate Iowa’s income tax by creating an individual income tax fund to adjust down the rate each year starting in 2029. The plan addresses the corporate income tax rate by decreasing the rate to 7.8% through adjusting various tax credits and exemptions.
The Senate tax bill also includes a provision that converts the Local Option Sales Tax (LOST) that has been instituted in most jurisdictions across the State into a statewide sales tax. The change would be considered an increase to the state sales tax, triggering the start of the 3/8 cent funding toward the Natural Resources and Outdoor Recreation Trust Fund, an initiative that was passed by constitutional amendment many years ago and remains hugely popular among Iowans in multiple polls over the years.
Most taxpayers would be held harmless when they are making a purchase since they would still pay the 7 percent sales tax to which they are accustomed.
All three plans, including the Governor’s bill (SSB 3044), eliminate taxes on retirement income and provide additional exemptions for retired farmers.
While a tax debate this early in the session is unusual, having it decided near the beginning of the year should open things up so issues concerning workforce, like childcare accessibility and affordability, workforce housing, eliminating student debt and placemaking – all parts of our GCV legislative priorities – can be taken up and addressed.
Steve is the Director of Government Affairs for Grow Cedar Valley and serves as the CEO of Pharmacy Marketing Group, Inc. (PMG) and President of FPCI, an administrative management and public policy consulting firm,