State Tax Changes Could Affect Your Business
Jan 19, 2018
State Policy Update
Tax Changes Could Affect Your Business – Information Requested!
Recently, Governor Kim Reynolds (R) delivered her first condition of the state address before a joint session of the Iowa legislature. In it she addressed her plans for state tax reform. Over the past year, the Economic Alliance has been strategically preparing for tax reform and how it affects our members.
Since the federal government enacted tax reform that will affect everyone from large business to small corporations, it is imperative that the state government follow suit. If absolutely no reforms are made by the state, every one and every business will likely see an increase in state taxes.
In her address, the governor announced her tax reform plans include reform for individual taxes, including eliminating federal deductibility for middle-class families and small businesses. This would mean that if a business is organized as an S-corps or LLC, they will likely see their state taxes decrease. However, her proposal did not include reform for corporate taxes, citing budget restrictions as the reason. That would mean businesses organized as a C-corps will likely see their state taxes increase if this plan becomes law. These increases or decreases are dependent on if the governor's plans come to fruition.
As we work with the governor’s office on her tax proposal, we are interested in learning how your business is organized to help us best direct the governor. Please email Barbra Solberg at firstname.lastname@example.org to indicate your business name and how your business is organized: LLC, S-corps, C-corps or other. This will help us advocate for what’s best for our members.
Click here for more details on the Governor’s budget proposal for FY2019.
New Opportunity to Ease Regulatory Burdens
Governor Reynolds recently addressed one of the Economic Alliance’s policy priorities: easing regulatory burdens on business. Data provided by the Mercatus Center at George Mason University suggests Iowa’s administrative code is overly burdensome to business and industry and impacts growing the economy.
The Economic Alliance has long supported that rules and regulations that affect business be regularly evaluated for necessity, effectiveness, cost-efficiency, enforceability and financial impact. We also support that these analyses be done in in cooperation with affected businesses and organizations by allowing for more opportunities for public input.
State RegData is a research platform that allows users to quickly analyze state regulations and identify the specific industries most targeted by excessive regulation. The public will now have more opportunity to provide input in the administrative rules process by using rules.iowa.gov to comment on pending rules.
Federal Policy Update
The Fight for Flood Protection Continues
Securing federal flood protection funds has been a top priority for the Economic Alliance. Since the flood of 2008, Congress has twice authorized funding of this Army Corps of Engineers project, but the money has not been released yet to begin construction. In the past two weeks, certain activities and discussions have brought the possibility back into the light.
At an open meeting recently with Congressional leaders, President Trump suggested Congress should consider bringing back the earmark process. Earmarks allow lawmakers to direct funds to a specific project. This process was eliminated in 2011 after many in Congress saw it as synonymous with wasteful spending. However, the ban has not made a dent in overall federal spending and has made it difficult for projects like Cedar Rapids flood protection to see the light of day.
Following the president’s comments, a hearing was held in the House Rules Committee to discuss lifting the earmark ban where most Members of Congress testified in support of returning to the process. House Speaker Paul D. Ryan (R-WI) told reporters, "Many of us have opinions on this issue (earmarks), but I want our members to have conversations. We have members who are very frustrated with the Corps — the Army Corps of Engineers and how the Army Corps of Engineers has not been up to snuff — to getting its job done.”
Meanwhile in the Senate, a hearing was held in the Environment & Public Works Committee where Senator Joni Ernst (R-IA) pushed for a commitment from Lt. General Todd T. Semonite of the U.S. Army Corps of Engineers to work to modify the current benefit-to-cost ratio (BCR) metrics used by the Corps to determine which projects receive funding. The way the BCR is currently calculated puts Cedar Rapids and other communities in rural states and regions at a disadvantage. General Semonite agreed that the BCR metrics do need to be changed and that a “one-size fits all metric” does not work.
The next move on lifting the earmarks and/or changing the BCR metric is yet to be seen but the Economic Alliance will continue to advocate with our federal elected officials to achieve this vital component in protecting our community from another disaster.