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House Republicans Unveil
Phase One of
Iowa
Tax Reinvention Project
A
Republican team assigned to reform
Iowa
’s tax code unveiled the first phase of their Iowa Tax
Reinvention Project today, outlining a plan to completely overhaul
Iowa
’s property tax system. The
group is comprised of Rep. Jamie Van Fossen, Rep. Kraig Paulsen,
Rep. Kent Kramer, Rep. Jim Kurtenbach and Rep. Tom Sands.
“We
set out with a goal to modernize and simplify the tax system,”
said Rep. Van Fossen, Chair of the
House Ways
and Means Committee. “This
is an exciting new proposal, and as far as we are aware, the only
one of it’s kind. This
group has worked extremely hard, and our consensus is that we’ve
got a winning solution.”
“The
governor challenged the legislature to sunset and replace the
system, which created an historic opportunity for us due to
Iowans’ desire for economic growth and change,” said Rep.
Kramer, a Johnston Republican.
“Our principles are guided by encouraging economic
growth, establishing equity, and offering simplicity and more
local control.”
Residential
property taxation will be based on an assessed value divided by
the square footage of the structure.
For example, a $100,000 assessed value home that has 2,000
square feet for the assessed value has a square foot tax valuation
of $50 per square foot. A
$200,000 assessed value home that has 2,000 square feet for the
assessed value has a square foot tax valuation of $100 per square
foot.
“Residential
property taxes are all over the board,” said Rep. Jim Kurtenbach,
group member from
Nevada
. “Our current
system punishes you for making improvements on your home, making
it a nicer place. We
create accountability between citizens and their local
governments. It is
time for a tax system that actually enhances economic development,
not one that stifles it.”
County
governments would be able to multiply the state or local
government tax rate. Therefore,
if a county government were to have a tax rate of one cent per
square foot, the owner of the $100,000 home would pay the county
$50 per square foot times 2,000 square feet times one cent per
square foot of valuation equals $1,000.
“Every
Iowan will be able to figure out their own property taxes, which
they cannot do today,” said Rep. Paulsen of Hiawatha.
“If your taxes are to be raised, you will know
immediately by how much you will be affected.
Iowans deserve to
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know
what is in their tax code. This
formula is fair and offers incentives for improvement, whereas the
current system does not.”
Commercial
property will be taxed in the same fashion as residential property.
The classification of “industrial” will be removed.
Further, commercial property will also be valued in terms of
an Iowa CPI valuation inflation index.
Agricultural
property tax currently has some of the biggest disparities.
According to the Iowa Department of Revenue and Finance, the
amount of actual tax payments made by
Iowa
farmers varies from approximately $8.50 per acre in the southern
counties to approximately $27.50 in northern counties.
A proposed alternative for agriculture taxation is to lock
the countywide average in place at the end of 2003 on a
county-by-county basis. The
average would be based upon an average of the previous five years of
tax collections from agriculture and applied uniformly to every acre
within the county.
“Equity
needs to be established for our rural residents,” noted group
member Rep. Tom Sands. “The
fluctuations have been unbearable for some.
We will alleviate this problem under our plan by establishing
equity tied to the size of the land, not the size of the yield.
As a result, we will have less fluctuations in property tax
revenue.”
Ways
& Means Update
Bills passed out of Ways & Means this week:
HF
546-A
bill for an act creating a sales tax exemption for certain equipment
sold for use in a warehouse or distribution center.
Bill
Assigned in Ways & Means this week:
HF 399-A
bill for an act relating to the new jobs and income program.
HF 620-A bill for an act relating to
new capital investment for businesses and new jobs by creating a new
capital investment program.
HSB 306-A study bill exempting from
state individual income tax the active duty pay of a member of the
Iowa National Guard or armed forces reserve units for service
performed during Operation Iraqi Freedom.
HF 191-A bill for an act relating to
Iowa
individual income tax checkoffs, providing an income tax checkoff to
fund child protection center grants.
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