Session Week 14
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 Iowans Celebrate Tax Freedom Day

Tax Freedom Day will arrive on the 109^th day of 2003—Saturday, April 19. Two factors are combining to make the average American tax burden lighter in 2003: federal tax reductions and a slow economy that produces less tax revenue.

Tax Freedom Day is the day when Americans will finally have earned enough money to pay off their total tax bill for the year. Every dollar that’s officially called income by the government is counted, and every payment to the government that is officially considered a tax is counted. Taxes at all levels of government are included, whether levied by Uncle Sam or state and local governments.

The result is a nationwide Tax Freedom Day and a separate Tax Freedom Day for each state. The total tax burdens borne by residents of different state vary considerably. This occurs not only because residents of different states pay different amounts of state and local taxes, but also because their federal tax payments can vary dramatically.

The residents of Connecticut will bear the nation’s heaviest tax burden in 2003. This year the total per capita tax burden will be $15,782. As a result, all of the income earned by residents of the Constitution State during the first 129 days of the year (until May 9) will have to go toward paying taxes. Residents of Massachusetts will bear the nation’s second heaviest tax burden this year with a per capita amount of $13,887.

At the other end of the tax burden spectrum are states with relatively early Tax Freedom Days. Residents of Alaska will bear the lowest tax burden in 2003, with a per capita amount of $8,109.

Iowa celebrated Tax Freedom Day on April 11. Surrounding states are: South Dakota on April 8, Minnesota on April 23, Wisconsin on April 19, Illinois on April 20, Missouri on April 12, and Nebraska on April 12.

Property Tax Ideas

Last week’s newsletter discussed a House Republican plan to overhaul the current property tax code.  That plan was drafted into legislation that is now House Study Bill 312. 

HSB 312 would enable property taxpayers to pay taxes based upon (1) structure and (2) land use.  The tax assessed to the structure (example:  a home) would be based upon the assessed cost per square foot of the structure.    

This week a revised proposal for property tax reform was brought to the table. 

This proposal would also (1) eliminate the rollback, (2) have equalization take place before taxpayers receive their assessment, (3) be revenue neutral, (4) combine commercial and industrial property into one class, (5) establish an effective tax rate for each class of property, and (6) define improvements that will not increase the assessed value of a home or business, and therefore provide an incentive for property owners to improve their property

This proposal would establish a timeline for the property tax system overhaul. The proposed timeline is:

Legislative Session 2003 – Legislature establishes framework for new Property Tax Code and establishes a pilot program to test the new system.

Legislative Session 2004 – Legislature approves funding for pilot program

Fiscal Year 2005 – Beginning July 1, 2004 , the taxing jurisdictions who volunteered for the pilot project would begin testing the new system

Legislative Session 2005 – Legislature would make policy changes (if necessary) due to the pilot program

Fiscal Year 2006 – Beginning July 1, 2005 , the pilot program would be tested in all taxing jurisdictions

Legislative Session 2006 – Legislature would make necessary policy changes to the new system

Fiscal Year 2007 – All taxing jurisdictions would fully implement the new system

Iowa ’s property tax system is very complex, and the proposals for reform are still “works in progress.”  House Republicans are committed to accomplishing property tax reform before the end of this legislative session. 

  Ways & Means Update

Bills passed out of Ways & Means this week:  

HSB 313-A study bill relating to urban renewal and tax increment financing.

HF 578-A bill relating to biodiesel fuel, including biodiesel fuel tax credits.

Bill Assigned in Ways & Means this week:

HSB 314-A study bill providing a wind energy production tax credit.

HSB 315-A study bill relating to ethanol blended gasoline tax credits.

SF 384-A bill relating to the Iowa Education Savings Plan Trust.

   Week in Review Archives

2003 Session
04-11-03
04-04-03
03-28-03
03-21-03
03-14-03
03-07-03
02-28-03
02-21-03
02-14-03
02-07-03
01-31-03
01-17-03
01-24-03

2002 Session
05-28-02 Special Session II 
05-10-02 Special Edition
04-22-02 Special Session I
04-12-02
04-05-02
03-29-02
03-22-02
03-15-02
03-08-02
03-01-02
02-22-02
02-15-02
02-08-02
02-01-02
01-25-02
01-18-02

2001 Session
05-04-01
04-27-01
04-20-01
04-13-01
04-06-01
03-30-01
03-23-01
03-16-01
03-09-01
03-02-01
02-23-01
02-16-01
02-09-01
02-02-01
01-26-01
01-19-01
01-12-01

2000 Session
04-28-00
04-21-00
04-14-00
04-07-00
03-31-00
03-24-00
03-17-00
03-10-00
03-03-00
02-25-00