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Government

Legislative leaders still working on tax code coupling

Talks are private, compromise possible

Rep. Linda Upmeyer

R-Clear Lake
Rep. Linda Upmeyer R-Clear Lake
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DES MOINES — Legislative leaders are having private conversations about tax law changes that would yield $96 million in tax relief for as many as 177,000 Iowans.

However, there’s little agreement between House Speaker Linda Upmeyer, R-Clear Lake, and Senate Majority Leader Mike Gronstal, D-Council Bluffs, on how to accomplish that without depleting the state treasury in an already tight budget year.

If Republicans who control the House are willing to take steps to either generate revenue or save revenue in other areas, then Gronstal sees a “path to do something.”

“It doesn’t seem likely we could do the whole thing, but we’re certainly willing to talk with them about that possibility,” he said Thursday.

The Senate is sending mixed signals, Upmeyer said, with Ways and Means Chairman Joe Bolkcom, D-Iowa City, saying coupling isn’t possible this year, while Gronstal is talking about negotiating a solution.

If the state couples with the federal tax code for the 2015 tax year, some Iowa taxpayers who bought supplies or equipment for business use will receive $96 million in tax relief. That would hit the state’s $7 billion-plus budget.

If the state does not couple, its coffers are $96 million healthier, but those taxpayers are hit with an unexpected tax expense.

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Neither Gronstal nor Upmeyer were willing to divulge the substance of the private conversations about coupling.

“I’m not talking about anything,” Gronstal said when asked whether the crux of negotiations is Republicans giving up a $46 million state sales tax break for Iowa manufacturers that was enacted — over Democratic objections — through administrative rules. “I’m just saying there are some private discussions going on about what might be possible.”

If the choice is between offering tax relief to a limited number of manufacturers “or taking care of 30,000 farmers, 25,000 small businesses,” Gronstal said he would “gravitate more toward the 50,000 or 60,000 effort to help those folks (rather) than something that is much more narrow in terms of its impact.”

If the sales tax break is the price of coupling, Upmeyer is not interested.

“No. That’s a bill we sent over (to the Senate) two or three times, so I don’t think that’s something that is in the foreground for us,” she said.

The Iowa Department of Revenue issued a statement this week saying it would be “virtually impossible” to couple with federal tax law by the impending March 1 filing deadline for farmers and commercial fishers.

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