Iowans for Tax Relief is working hard to win more victories for all Iowa taxpayers in the closing weeks of this 2011 Legislative Session. We are going full speed ahead, not distracted by recent resignations of some employees or by fantastic speculations of our opponents and news media.
Staying on Course. For 32 years ITR has stayed on course, through staff changes and many ups and downs. ITR is respected and effective because we persevere, tell the truth, keep our word, and are consistent and dependable. Our principles and goals remain the same: limited government; lower taxes, spending, and debt; economic growth with more good jobs; and opportunity for all people. All this will not change.
Our strong volunteer leadership team and our outstanding 10 staff members are stepping up. We will gradually increase our staff as we find the right person for the right job.
Our Lobbying Team. Dr. Don Racheter, 30-year ITR Board leader and expert on Iowa government and politics, will lobby for ITR in Des Moines during the rest of this Legislative Session. Don is taking a short-term leave of absence from his position as President of Public Interest Institute. ITR’s two part-time contract lobbyists continue their helpful assistance.
And our members are still our best lobbyists! Lawmakers listen to ITR — and the high taxers and big spenders fear ITR — because our members speak up strongly for our principles.
Pro-taxpayer Action Opportunities Now
Iowa voters last November sent a strong message: reduce government, spending, and taxes. This Legislature and Governor have already taken good steps, including the new Taxpayers Trust Fund which will capture excess state tax collections and send them back as tax relief for Iowa taxpayers.
We see an opportunity to win a big pro-taxpayer package as the Legislature hammers out a budget and moves toward adjournment. It won’t be easy. Major negotiating and compromise by the Senate, House, and Governor remain to be done; they are still far apart. ITR will be working with them, doing all we can do to help make it happen.
We suggest a wise pro-taxpayer, pro-growth, pro-jobs package could include:
- Restore Iowa’s fiscal soundness by cutting total state general fund spending for the next fiscal year at least 5% below total spending this year. The state must live within its income!
- Property tax reform in 3 ways: (1) strong, responsible limits on total property taxes of each city and county; (2) relief for all property taxpayers by increasing the share of school costs paid from state tax dollars; and (3) correcting the unfair over-taxing of commercial and industrial property. See information below.
- Include in the final package the two good Iowa income tax relief steps which Governor Branstad item-vetoed: (1) increase the Iowa earned income tax credit, to help low-income working Iowans; and (2) allow faster depreciation for business equipment (matching Iowa law with federal law on this point), to encourage more business investment and job creation. These two steps would greatly help Iowa low-income families, small businesses, and Iowans who need good jobs. They were part of a bipartisan agreement which ITR supported. Let’s not let them die. See our April 21 news release on these issues.
ITR will also watch for any other opportunity to reduce the burden of Iowa’s income taxes and property taxes — the two taxes that do the most to drive businesses, jobs, and people out of Iowa. The House has already passed a 20% cut in state income tax rates. It is stalled in the Senate, but this cut (or any part of it) could be a helpful part of a negotiated package.
New Property Tax Reform Bill: a Good Start
A new property tax reform and relief bill, HSB 240, was unveiled in the Iowa House of Representatives this week.
One essential feature is a strong limit on the property taxes of each city and county, while allowing the voters to raise that limit if they choose. Each city or county’s total general fund property taxes could grow only enough to match inflation (Midwest consumer price index) plus the valuation increases due to new construction and improvements.
However, this limit could be increased for up to two years by majority vote in a special election. This gives the people more control, and the local politicians less control, over their property taxes. ITR strongly supports this principle for all state and local governments: limit total taxes, allow a tight but responsible annual growth rate, and let the voters decide whether or not they want more government and higher taxes. Some local politicians will scream, because they want to keep the power and they don’t trust their voters.
A second good feature is relief for all property taxpayers by moving more of local school costs from property taxes to state tax dollars. Most K-12 school costs in Iowa are paid by a uniform property tax levy, plus a school foundation amount that is now paid 87.5% from state funds and 12.5% from property taxes. This bill would gradually raise the state share to 100% over a 7-year period, thus replacing the 12.5% now paid by property taxes. Instead of spending those state tax dollars at the state level, let’s use them to reduce property taxes. ITR seeks property tax relief that will help all property taxpayers, and this is one good way to do it.
The third feature would remove most of the excessive assessment and taxation of business property (both commercial and industrial property). The problem: business property is assessed for property tax purposes at 100% of actual value, while residential and agricultural property is assessed at about half of actual value due to a rollback requirement. ITR supports the rollback as essential protection for homeowners and farmers, but overtaxing business property discourages Iowa business growth and job creation.
This bill would reduce the property tax assessment of commercial and industrial property from the current 100% of actual value to 60% of actual value over a period of 5 years. This is a big step toward fairness and economic growth.
Reduced property taxes on business property will be a strong incentive for more construction, more new and expanded businesses, and more jobs. Some cities and counties will still have a net revenue loss due to the lower property taxes on business property. The bill says the state intends to reimburse local governments for most of that revenue loss. But this commitment needs to be strengthened, to prevent a shift of property taxes from business buildings to homes and farms. This problem is another reason why the strong total property tax limit in this bill is essential.
To get this bill through both Houses and the Governor, much negotiating and some compromise will be needed. ITR sees this bill as a good start and will work to help pass it.
Be Ready to Call Your Legislators
Please give your Legislators your personal opinion on these issues now.
ITR may also ask you to contact your Legislators quickly on at least one specific tax or spending issue. In the closing weeks of the session, major legislation often seems stalled but suddenly moves fast.
Please be ready for our Tax Action Alert or our email or phone request for quick action. Our members are the heart and strength of ITR. Your prompt response has won dozens of important pro-taxpayer victories during our first 32 years. Let’s do it again!
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