Government

Governor to sign tax cut bill in Hiawatha

Ceremony set for Wednesday at tablet manufacturer

Governor Kim Reynolds campaigns at a GOP District Convention at West High in Iowa City on Saturday, April 28, 2018.



KC McGinnis / The Gazette
Governor Kim Reynolds campaigns at a GOP District Convention at West High in Iowa City on Saturday, April 28, 2018. KC McGinnis / The Gazette

CEDAR RAPIDS — Hiawatha seems to have become the tax cut bill signing capital of Iowa.

Former Gov. Terry Branstad signed the largest tax cut in Iowa history — $4.4 billion over 10 years — at Hawkeye Ready-Mix Concrete in Hiawatha in 2013.

His successor, Gov. Kim Reynolds, will sign legislation on Wednesday at another Hiawatha business, with promises to cut Iowans’ income taxes by $2.86 billion over six years.

Reynolds will sign Senate File 2417 in front of invited guests at 2:15 p.m. at MobileDemand on Boyson Square in Hiawatha. Unlike the commercial property tax bill five years ago, which was signed with leaders of both Democrats and Republicans present, the income tax cut legislation had no Democratic support.

SF 2417 will reduce and reform Iowa income taxes, according to House and Senate majority Republicans who pushed through the legislation at the end of the 2018 session earlier this month.

Sen. Randy Feenstra, R-Hull, chairman of the Senate’s tax-writing committee, called the bill “really significant” to Iowans because it will allow them to keep more of their paycheck.

The state Department of Revenue’s 49-page analysis of the tax package said that for tax year 2019, Iowa’s 1.6 million income tax filers would receive an average cut of $243, or 9.8 percent.

Still, Democrats warned the tax cut would benefit mostly the rich, raise other taxes and blow a “massive hole” in future state budgets. They said the tax deal as tilted in favor of wealthy Iowans and corporations because more than half of the individual income tax benefit will go to people with annual incomes of more than $250,000 who make up about 3 percent of the state tax filers.

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They also argued it’s a tax increase because Iowans will pay sales tax on digital or online purchases such as electronic games and entertainment, ride-sharing services, online travel sites and popular subscription services.

Sen. Matt McCoy, D-Des Moines, estimated the law will cost Iowans nearly $67 million for items and services they currently buy online but pay no sales tax on them.

Backers of the legislation said the change levels the playing field for brick-and-mortar retailers and service providers.

In addition to lowering tax rates, the law will eliminate federal deductibility by 2021 with some exceptions. It also includes triggers to protect budget sustainability in future years, ensures full repayment of the cash reserve fund this year and does not reduce the property tax backfill to cities and counties.

The agreement also maintains large ending balances in fiscal 2019 and 2020 and protects budget commitments made to education, health care and public safety, according to backers.

It also lowers the top corporate rate from 12 percent to 9.8 percent.

According to the Department of Revenue, Iowans with incomes of:

l $10,000 to $20,000 — would see an average cut of $18 in the first year.

l $60,001 to $70,000 — average cut of $182.

l $250,001 to $500,000 — average cut of $2,593.

l $500,001 to $1 million — average cut of $6,465

l More than $1 million — average cut of $18,773.

MobileDemand, which Matt Miller started in 2003, makes rugged tablet computers used by mobile workers in several industries, including agriculture, energy, field services, food and beverage, the public sector, retail, transportation, warehouses and manufacturing.

l Comments: (319) 398-8375; james.lynch@thegazette.com

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