DES MOINES — Iowa individuals and businesses would not owe state tax on federal stimulus checks or government aid resulting from the coronavirus under tax policy measures now being considered by state lawmakers.
Two bills making their way through the Iowa House and the Iowa Senate would exempt the federal COVID-19 assistance from state taxation while clarifying and modernizing provisions of the state tax code, GOP sponsors say.
“I believe we’ve come up with a bill here, folks, that really puts Iowans first and gives them the predictability of the tax cuts that are coming down the pipeline,” said Sen. Jake Chapman, R-Adel, chairman of the Senate Ways and Means Committee, which passed a 102-page omnibus tax policy bill Thursday.
The House and Senate bills have numerous similarities, but the Senate version also seeks to remove revenue growth triggers tied to future income tax relief and award capital gains tax breaks and other provisions that Democrats say would carry a price tag of about $100 million next fiscal year.
House File 2461 is estimated to have a nearly $40 million impact, they noted. The House passed the bill Thursday night a vote of 90-6.
Sen. Joe Bolkcom, D-Iowa City, expressed concern majority Republicans have yet to reach a fiscal 2021 budget deal, and he worried the session work — which leaders hope to wrap up this month — will be further complicated by a potential major tax policy impasse.
“This is a Senate bill that seems to have no agreement with the House,” Bolkcom told subcommittee members before Thursday’s 2-1 vote to forward Senate Study Bill 3202 to the full Senate Ways and Means Committee.
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“We’re ready to wrap it up, and here we are fiddling around with two different major pieces of tax policy,” Bolkcom said. “Should we begin to work on hotels for next week, Sen. Chapman?”
Chapman said Senate Republicans are committed to removing the 2017 “triggers” so the planned $240 million income tax cuts will take place in 2023 when Iowa eliminates federal income tax deductibility and state tax rates and brackets are reduced.
“That is taxpayer money,” Chapman said. “More now than ever we need predictability in our tax climate, we need to incentivize, not penalize, Iowans. This is the time to really get our economy back on solid ground. These are measures that I believe provide the stability we need to get that engine rolling again.”
Included in the House and Senate bills are provisions proposed by state Department of Revenue officials designed to clarify a handful of tax policies, such as filing obligations for moneys and credits, rules around powers of attorney, potential perjury associated with the filing of department forms and what information will be redacted upon request before the release of public documents.
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