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District 72 Update

April 18, 2018
By State Rep. Dean Fisher - R-Montour , Toledo Chronicle, Tama News-Herald

Newsletter for Thursday, April 12, 2018

Week 14 saw a significant slow down on the floor of the House as we dealt with background work on budget and tax reform issues ahead of introducing those bills.

On Wednesday of this week the House Ways and Means Committee introduced the House tax reform bill that is known as the Middle Class Tax Relief Act. This is an extensive bill that I will be unable to fully describe in this newsletter, but I will hit on a few highlights. The intent of this bill is that it be fair, sustainable, and modernize Iowa's tax code. Iowa's tax code is outdated in many areas, is overly complex, and contains some of the highest income tax rates in the nation. Furthermore, recent tax reform at the federal level has highlighted the need for Iowa to also reform our tax code. With the federal reform Iowans will pay $1.8 billion less in federal taxes in tax year 2018, but due to federal deductibility Iowans will pay slightly higher state taxes of $107 million in tax year 2018 and $153 million in tax year 2019. House Republicans feel this windfall should not be used to grow state government, but instead that money should be returned to the hard working taxpayers of Iowa. The Middle Class Tax Relief Act will reduce the burden on Iowa's taxpayers by $1.3 billion over 5 years while protecting the sustainability of our budget.

Article Photos

State Rep. Dean Fisher
R-Montour

The Middle Class Tax Relief Act will reduce Iowan's income taxes by $139 million in tax year 2019 and by $238 million in tax year 2020 by reducing the income tax rates across the board, offering income tax relief to 90% of middle-class Iowans. The average taxpayer will see an 8.9% reduction in income taxes. A single taxpayer making $25,000 would see a 14.9% tax reduction, a single parent with one child making $48,000 will see a 12.4% tax reduction, and a family of four making $52,000 will see a 14.4% tax reduction.

In 2019 the standard deduction will increase from $2,070 to $3,000 for a single person and from $5,090 to $7,500 for a family and will be indexed in future years. In 2020 the individual income tax rates for middle class Iowans will be reduced further with the largest cuts to the bottom five income brackets.

An area critical to our farmers and small businesses is coupling with federal Section 179 deductibility. In 2018 the limit will be increased from $25,000 to $100,000 for a single item, and from$200,000 total up to $400,000 total. In 2020 those limits will increase to $250,000 and $1,000,000.

Another critical area that this tax reform bill addresses is with online sales and digital goods. Current law requires that sales taxes be paid for online sales, but does not require the seller to collect that tax if they do not have a "brick and mortar" presence in Iowa. Of course that rarely happens, leaving our main street merchants at a disadvantage in competing with online sellers. Our local merchants make tremendous contributions to our communities and economy, creating jobs and paying property taxes, among other contributions. Many of our local merchants are closing due to this unfair treatment that is written into our state's tax code. This tax reform bill aims to make the playing field more fair by modernizing the tax code. Online sellers, 3rd party sellers on marketplaces such as Amazon and eBay will be required to collect and remit sales tax to Iowa. Also, sales tax will be applied to products that have existed for decades, but are now delivered in a digital format like music and videos. An example of this is that if you buy a video at a local store you will pay sales tax on it. However, if you buy the same video online (from iTunes for example), you don't pay sales tax, putting the local merchant at a disadvantage. These updates will be put directly into the tax cuts and will ensure the Iowa tax code is fair for our main street and online businesses both.

This bill is likely to see amendments as it moves through the process, I will keep you updated as to progress.

Notable bills:

Senate File 481 - Ensuring safe communities in Iowa - This bill was signed into law by the governor on April 10.

Senate Joint Resolution 2006 - Governor and Lt. Governor Succession - This bill proposes changes to the state constitution to clarify the details of how a Lt. Governor succeeds a governor that leaves office during their term, and how the Lt. Governor is then appointed. This issue was highlighted last year when Governor Branstad resigned to take the position as Ambassador to China. This bill clarifies that the Governor has the authority to fill the position of Lt. Governor by appointment.

On Thursday of this week the House was honored to have Dr. Peggy Whitson in the House chamber as we passed House Resolution 112 honoring her outstanding career as an astronaut. Dr. Whitson was born in Mount Ayr, Iowa and raised on a farm near Beaconsfield, Iowa. Dr. Whitson holds the record for being the American to spend the longest time in space, 289 days on the US Space Station, and the longest time in space for any woman worldwide. Dr. Whitson is truly a great Iowan and a great American!

As always, please feel free to contact me at dean.fisher@legis.iowa.gov or 641-750-3594.

 
 

 

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