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Iowa
Investment Initiative Gets
Early
Attention
The
House Ways and Means Committee members worked into the evening on
Wednesday, January 16. The
bounty of their hard work was the passage of a package of
economic-stimulus tax cuts.
The
Iowa Capital Formation Act of 2002 (HSB 507), Small
Business Growth Initiative – Subchapter S (HSB 502),
New Economy Employment Initiative - Capital Gains
(HSB 501), and the Iowa Start-Up Company Initiative (HSB
504) were all among
the top priorities of House Republican legislators this year.
The stimulus package plans include tax credits and
deductions for start-up companies that are funded with at least
25% Venture Capital money, and who use Iowa as their primary place
of business. Another benefit will be the
Iowa Fund of Funds, which will issue preferred stock to
investors, backed by contingent investment tax credits.
The
goal of this initiative is to provide more incentives for new
companies to locate in Iowa.
As these new companies start-up in our state, needed jobs
will be created at little or no cost to the state.
In
addition, the Iowa Start-Up Initiative includes a small-business
growth initiative for Subchapter S corporations, which are
typically family or employee-owned.
A partial deduction of income from capital-gains taxes on
certain employee stock options will also be available as a part of
this stimulus package.
Each
piece of the Iowa Start-Up Initiative will assist in the expansion
of Iowa’s tax base, and will -- in time -- help to turn Iowa
into a strong and competitive economic force in the Midwest.
Governor
Vilsack Offers Condition
of
the State Address
On
Tuesday, January 15, Governor Tom Vilsack addressed a joint
assembly in the House Chamber with his Condition of the State
Address.
While
Governor Vilsack laid out his priorities for the year, he failed
to provide any information on his proposed budget. Republican
legislators look forward to seeing the budget and working together
to solve the difficult issues facing the state this year.
House
Republicans do agree with the Governor on many aspects.
We maintain the stance that education must remain our top
priority. Republicans
are especially pleased with the Governor’s pledge not to raise
taxes to solve the current budget crisis
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However, we are upset
that the Governor continues to claim credit for improvements in the
Iowa tax climate made via tax relief efforts.
Yet, at every turn he blames tax cuts for everything that
goes wrong within the state budget.
Iowa would not have realized the economic boom of the 90’s
to the extent that we enjoyed without the stimulus of tax relief.
Governor
Vilsack continues to eye the cash reserve fund to fuel his pet
projects.
The fund – often mistakenly referred to as the “Rainy
Day” fund – is, quite literally, our checking account.
This fund is what we use to ensure that the cash flow in the
state remains healthy, and to see that all of our bills are paid.
Without the reserve fund, schools and hospitals would have to
borrow money in order to make their own payroll, with no guarantee
of repayment from the state
Ways
& Means Update
Bills
Passed in the Ways & Means Committee this week:
HSB
501 Establishes
a new economy employment initiative by providing for a partial
deduction under the individual income tax for the capital gain from
the sale or exchange of capital stock of a corporation which was
acquired by an individual on account of employment with the
corporation.
HSB
502 Establishes
a small business growth initiative by adjusting the allocation to
Iowa of income earned by an S corporation for purposes of the state
individual income tax.
HSB
507 Creates an
Iowa capital investment board, authorizing the organization of an
Iowa capital investment corporation and an Iowa fund of funds, and
the issuance of contingent tax credits to investors in the Iowa fund
of funds.
Bills
Assigned in the Ways & means Committee This Week:
HSB
504 An act relating the
deferment of taxable income for start-up businesses.
HSB
505 An act allowing a tax
deduction for equity investments in venture capital funds, and
limiting the fiscal impact of the tax deductions.
HSB
506 An act updating the Iowa
Code references to the Internal Revenue Code, repealing an
adjustment to net income for capital gains from installment sales,
relating to an adjustment to income for school district income
surtax paid, providing that refunds from the federal rebate are not
taxable, and correcting a reference in the innocent spouse statute.
SF
514 an act relating to a maximum property tax dollars
limitation for counties
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Week
in Review Archives
