Government Affairs Weekly Report - Week 14: Apr. 9-12, 2018

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group
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Overview / Major Events
This will be an abbreviated Weekly Report, as Session is currently in a grind to nowhere and yet requires a constant presence in the Capitol that makes compilation of this Report a challenge.

No Budget Deal. No Tax Deal.
Despite on-going discussions and negotiations, House and Senate leaders have not been able to agree on a joint tax cut deal or joint budget targets. In fact, on the tax front, it appears the parties are farther apart than when the week began.

Unless there is a major breakthrough by the end of this week, we will all need to settle in for significant overtime (Session expenses run out on April 17). Adding to the uncertainly, it is rumored that a significant number of legislators are not able to be in Des Moines the week of April 23 (meaning we could be looking at early May before all is complete).

House Republicans Release “The Middle Class Tax Relief Act”
On Wednesday night House Republicans announced the details of their own tax cut plan called “The Middle Class Tax Relief Act”.
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What It Does:

• Reduces Iowa individual income taxes by $139 million in Tax Year 2019 and by $298 million in Tax Year 2020.
• Reduces tax rates for all taxpayers, with the bulk of the rate reductions in the low and middle-income brackets.
• Raises the standard deduction for those who do not itemize.
• According to House Republican Staff analysis, their plan will provide an 8.9% reduction in income taxes to the “average” Iowa taxpayer and that 90% of “middle-class” taxpayers will see their state tax liability reduced.
• Creates new taxes for online sellers, marketplace retailers, and for digital delivery of common products.

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What It Does NOT:

• No changes to federal deductibility, it remains.
• No change to Iowa’s top rate of 8.98%.
• No changes to corporate income taxes or tax credit programs.

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Senate Tax Plan 2.0
Senate Ways and Means intends to move a 2nd version of their tax reform package early next week.  Based on conversations with Senate leadership, this version WILL continue to include our crucial tax equity language.

Banking Legislation:

• The Iowa House held a public hearing on tax reform and a number of Bankers participated and made strong arguments on the need to include bank / credit union tax equity in any final tax reform legislation.
• House Ways and Means moved their first version of tax reform out of Committee and to the floor. While it does not currently include our tax equity language, this bill is NOT the final product and expect continued negotiations between the House and Senate over the next week to 10 days.