Government Affairs FINAL REPORT - Week 17: Apr. 30 - May 5, 2018

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group
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Overview / Major Events
The Iowa General Assembly concluded its business on Saturday evening, May 5, with House passage of SF 2417, the final version of tax reform / reduction.

House, Senate, and Governor agree on tax reform and reduction
Late last week the House, Senate, and Governor reached final agreement on the details of their tax reform and reduction effort. That agreement became SF 2417 and it was the last bill to clear the Legislature before they headed home to face the voters.

Here are the highlights of SF 2417:

• Tax reforms and cuts to be phased in over a five-year period (with some cuts/reforms tied to triggers to prevent a Kansas-like situation in the out years).
• First year income tax cut will come directly from rate reductions for all taxpayers, with largest cut going to those in middle and lower income brackets.
• In the out years federal deductibility will be phased out and the revenues generated will be plowed into lower tax rates (with tax brackets collapsed from nine to four and the top rate reduced from 8.98% to 6.5%).
• Offsets the cost of the tax reductions through imposition of a sales tax on Internet marketplace purchases (digital goods—think ebooks and music; subscription services—think streaming video; ride sharing—think Uber; and sellers of third-party merchandise—think Amazon).
• Eventually fully couples with federal 179 deduction and lowers Iowa’s top corporate income tax rate from 12% to 9.8%.
• Savings to the average Iowa taxpayer will be $300 a year.

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