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The
Basics on the Republican Tax Reform Plan
On
Thursday, April 3, House Republicans unveiled our plan to sunset
and reconstruct the current property tax code House Study Bill
(HSB) 312. This
initiative is the first phase of House Republicans’ two-phase
Tax Reinvention Project. The
second phase, which will sunset and reconstruct the current income
tax code, will be worked on over the interim and be unveiled
during the 2004 legislative session.
The
new plan would have five separate classifications of property: (1)
Residential, (2) Commercial Industrial, (3) Agricultural
Structures, (4) Greenspace/Environmental Preference, and (5)
governments and not-for-profits.
Residential
Residential
property taxpayers would pay taxes based upon (1) structure and
(2) land use. The tax
assessed to the structure (example: a home) is based upon the assessed cost per square foot of
the structure.
Property
will still be subject to city, county, and school taxing
jurisdictions, and the local taxing jurisdiction will still set
the tax rate for that particular jurisdiction.
There are only two ways that a homeowner’s property taxes
would increase: (1)
if the local taxing jurisdiction increases the tax rate, OR (2) if
the homeowner increases the square footage of the home.
Commercial
Industrial
Industrial
and commercial property will be classified the same, rather than
having two separate classifications.
Second, commercial and industrial property would be taxed
in the manner as residential by using a value per square footage
method.
Agriculture
Property
The
proposed alternative for agricultural taxation is to simply lock
the countywide average in place at the end of 2003 on a
county-by-county basis. Equity
among counties is ensured since variations in land productivity
value have been incorporated in the production formula for the
past quarter century. Using a more uniform land use policy and
permits the statewide implementation of an Environmental
Preference tax that benefits landowners who undertake conservation
initiatives by reducing taxes on a countywide uniform basis.
Greenspace/Environmental
Preference
To
address existing inequities in land use taxation, the House
Republicans’ proposal includes an Environmental Preference tax
that combines the various tax incentives for conservation
practices
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into
a single reduced rate property tax. Implementation of the
environmental preference tax may occur on a county-by-county basis
and simply reflects a percentage of the countywide agriculture tax
payment. The environmental preference tax should be sufficiently low
to encourage the increased use of watershed management agreements
and to foster further implementation of science-based soil and water
conservation practices.
Government
and Nonprofit Entities
The
House Republican plan will review the ideas suggested by Public
Strategies Group, which is part of the Governor’s
"Reinvention Savings" proposal.
Draft
of Proposed “Iowa Values/Bio Fund” Unveiled
On
Wednesday, April 9, the bipartisan group working on the development
of a proposed Iowa Values/ BIO Fund unveiled their preliminary plan.
The initial document identifies six components to the Fund: business
development and assistance ($350 million), Regents research and
development ($48 million), regional economic development ($50
million), quality of life ($60 million), and school infrastructure
($400 million). The fund’s total currently stands at $983 million.
A
15-member board will oversee the money for the Iowa Values Fund.
The members will consist of individuals from diverse business
and economic backgrounds.
Ways
& Means Update
Bills passed out of Ways & Means this week:
HF 99-A
bill for an act relating to the recycling property exemption from
property tax.
HF 491-A bill for an act relating to
tax credits and associated refunds for cooperatives engaged in the
production of value-added agricultural products.
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.
Bill
Assigned in Ways & Means this week:
HSB 311-An
act relating to taxation of property and income.
HSB
313-An
act relating to urban renewal and tax increment financing (TIF).
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