>> Monday, March 30, 2009
Yeah, me too. This ain't it. (Sorry for all the political stuff lately... It seems we're losing our freedoms faster than anyone thought possible...)
Anyway, it seems the Iowa legislature is looking to do away with the federal deductibility with Bill HSB284. Don't know what federal deductibility is? In a nutshell:
In Iowa we have the opportunity to deduct our federal income tax burden from our ordinary income prior to calculating our taxable income. This is regardless of whether or not you itemize.Now, I'm not a tax accountant. Luckily this guy is. So I'll let him break it down...
Democrats claim that eliminating federal deductibility will allow Iowans to pay their bills, pay for college tuition and cover day-to-day expenses. But according to their own math, it will only give the average Iowan an extra 17 cents a day.
- $63,350 is the new $125,000. The promoters of the repeal say it will only affect "households" with incomes over $125,000. Wrong. The top rate, and the tax increase, kicks in at $63,350. The "$125,000" figure apparently assumes two-earner couples with each earner getting at least $63,350. Iowa's rate structure taxes each earner separately.
Making it worse by comparison: The Legislature Democrats would eliminate the deduction for federal taxes paid while lowering the top stated Iowa tax rate from 8.98% to 6.98%. They tout this as making Iowa's top bracket "competitive" with Nebraska's top rate of 6.84%. They are right, but not in a good way. When you do the math, you see that they are increasing Iowa's top effective rate from lower than Nebraska to higher (and, of course, much higher than South Dakota's top rate of 0%).
I especially loved this quote from Sen. Joe Bolkcom, D-Iowa City, chairman of the Senate Ways and Means Committee, in the WCFCourier:
"The most well-off Iowans are likely going to pay a little more.
Says the tax guy: Making it look like they really just want to raise taxes on somebody. If they wanted to make it look like real reform, they wouldn't be focusing on making somebody pay more; they'd be looking at what system would best finance the state budget needs at a low compliance cost without driving businesses and jobs from the state.
Well off, of course, meaning anything over $63,350. So, let me ask you punk: do you feel wealthy?
FYI: The bill is being debated at the committee level today and there is a public hearing at the State Capitol on Tuesday, March 31 from 7:30 pm to 9:30 pm on House Study Bill 284. You can support efforts to protect federal deductibility by being present and showing your support during the discussion.