Same recipe, same dish. The 2016 session of the 86th General Assembly of Iowa convenes today. As the membership is about the same as last year’s session, we can expect pretty much the same tax policy results. There will be no fundamental reappraisal of Iowa’s dysfunctional income tax this year. If anything, it might get a little worse.
Iowa’s tax system is a rat’s nest of high rates and complexity, full of special-interest loopholes, feel-good spiffs for sympathetic groups, and subsidies for the well-connected. It’s a great deal for the insiders who can work the system, paid for by high rates on those of us without lobbyists and tax credit consultants.
What Iowa needs is an overhaul that lowers the rates significantly, paying for them by simplifying the rules and swearing off subsidies like the notorious Orascom deal and the now-defunct film tax program. In other words, something like The Tax Update’s Quick and Dirty Iowa Tax Reform Plan.
What Iowa is likely to get is more special interest tax subsidies. In a story about 10 issues likely to spark debate in Iowa Legislature, The Des Moines Register reports:
A host of Iowa business and farm groups are lobbying for state tax credits to attract investment in renewable chemical manufacturing and advanced bio-refining. The goal is to build upon Iowa’s renewable fuels industry. Iowa needs to move swiftly because of competition for businesses looking to invest in the industry, business lobbyists say.
“If we are looking at a game changer for this session, this is it. It is absolutely huge,” said Jay Byers, chief executive officer of the Greater Des Moines Partnership. Legislation to provide renewable chemical manufacturing tax credits was approved by the House last session, but failed to pass the Senate.
Think about it. The idea that the state can constructively direct investment capital assumes that the insiders that make up the Greater Des Moines Partnership and the small town politicians who run the state legislature have some unique insight on what the industries of the future are. If so, they should be investing their own money in these “game changers,” because there’s obviously a great profit opportunity to be had. Instead they want to spend your money, and mine, on it. That tells you something important.
Remember, these are the same people who told us it would be a great idea to subsidize Iowa’s film industry with tax credits (page 6 at the link), and that worked out just great.
The only constructive thing likely to come out of the legislature is a “code conformity” bill that updates Iowa’s 2015 income tax rules for the retroactive passage of the federal “extenders” bill in December. The Department of Revenue cautions taxpayers to not file returns using the extended provisions until the conformity bill is passed. The Section 179 deduction, the educator expense deduction, and tax-free IRA gifts are key provisions that are affected. Last year the code conformity bill was one of the first bills passed, in mid-February.
The key date to know is January 22, 2018. That’s the date on which air travelers with a driver’s license or identification card issued by a state that does not meet the requirements of the REAL ID Act (unless that state has been granted an extension to comply with the Act) must present an alternative form of identification acceptable to the Transportation Security Administration (TSA) in order to fly domestic. Acceptable identification would include a passport or passport card, Global Entry card, U.S. military ID, airline or airport-issued ID, federally recognized tribal-issued photo ID.
Congress last year passed a provision allowing IRS to revoke passports for non-payment of taxes. And of course the IRS never makes mistakes.
William Perez, How Soon Can We Begin Filing Tax Returns?
Annette Nellen, PATH and Many Tax Changes – PL 114-113
Kay Bell, 24 top taxpayer problems of 2015. “IRS electronic approach to customer service tops National Taxpayer Advocate’s annual list”
Jack Townsend, Hawaii Businessman Sentenced to 46 Months
Peter Reilly, Poor Return Preparation Kills Facade Easement Tax Deduction. “Often the buildings already have so much restriction on them already that promising not to alter them is a little like me renouncing my super powers“
Robert D. Flach has thoughts on FINDING A TAX PROFESSIONAL.
Joseph Furando of Montvale, New Jersey thought he had the perfect way of performing alchemy. He took biodiesel fuel that wasn’t eligible for two tax credits and magically turned it into biodiesel fuel that was eligible for the tax credits:
Tax Credits, fraudulent? Unthinkable!
Scott Drenkard, Businesses Love Texas, Except this One Tax that Holds the State Back (Tax Policy Blog)
Renu Zaretsky, Looking ahead to 2016 and beyond? It’s blurry. (Today’s TaxVox headline roundup covers the upcoming State of the Union Address, the Taxpayer Advocate report from last week, and more.
TaxProf, The IRS Scandal, Day 977
Something to look forward to. Winner Of $1.3 Billion Powerball May Face Suits By Friends, Co-Workers, Family (Robert Wood).
Career Corner. Unhappy Accountants: Go Get a 10% Raise (Caleb Newquist, Going Concern).