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The Conservative Reader:
Iowa

Kraig Paulson: An Update on Federal Deductibility

Kraig Paulson: An Update on Federal Deductibility

Update:  Repeal of Federal Deductibility is tax increase in every tax bracket!

Yesterday’s newsletter addressed the Democrat proposal to eliminate federal deductibility; a tool that allows Iowans to deduct our federal income taxes from our ordinary income prior to calculating our income for state taxes.   This is the largest, and in some cases the only, tax deduction available to many hardworking Iowans. 

Last night the House Ways & Means Committee passed out the proposal on a party line vote.  14 Democrats voted aye – 11 Republicans voted no.   House File 807 is the new bill number as the bill moves forward and becomes eligible for debate in the House.

After having additional time to study the proposal, we have discovered exactly what we expected: more Iowans than originally stated are going to see a tax increase.  It is disheartening to hear this explained to Iowa’s taxpayers as a tax cut for two-thirds of Iowans.  The facts tell us– it is not.  

Under the Democrats’ proposal, 50.9 percent of Iowans will either see no change in their tax liability or see a tax increase in 2009.  40% of the individuals receiving a tax increase make less than $40,000 per year.  69% of the individuals receiving a tax increase make less than $70,000 per year.  See the breakdown of HF 807 at http://iowahouserepublicans.com/wp-content/uploads/09-feddeductibility-finalversion.pdf.

And believe it or not, over 10% of the individuals receiving a tax decrease in 2009 make over $100,000 per year.  Based on the discussion last night in committee it appears to be hit or miss as to who the real winners and losers are.

Additionally, the Democrats have failed to inform Iowans about the implications of their proposal in 2011.   On December 31, 2010, the federal tax relief of 2001 and 2003 will expire. It appears now that Iowans’ federal income tax liability will increase by $160 – $180 million.  This means that you’ll lose the ability to deduct your federal taxes less than two years before your federal taxes are set to dramatically increase.

Finally, the Democrats’ proposal has the potential to put Iowa small businesses in an even deeper hole.  Because many Iowa small businesses are structured as individual tax payers they too will see their taxes increase.   The way many of these businesses will try to absorb this cost is by eliminating jobs or by passing the added expense onto the consumer.   Either way, our struggling economy will continue to suffer under this plan.  

Make no mistake this bill is a tax increase on Iowans in all tax brackets from day one.  And within a few years it will result in a huge tax increase for almost every single Iowan.

When this bill is considered by the legislature, House Republicans will fight on behalf of all taxpayers and their ability to keep more of their hard earned dollars.

PUBLIC HEARING: Tuesday, March 31, 2009

Location: House of Representatives Chamber, Capitol Building, Des Moines

Time: 7:30 pm-9:30 pm tonight.  (Rally at 6:30 in the Cafeteria)

If you can attend the public hearing at the State Capitol on Tuesday at please join us.

EMAIL AND PHONE CALLS
If you are not able to make it but still want to make a difference please call and email your elected officials today.

House Switchboard: (515) 281-3221

Senate Switchboard: (515) 281-3371

Email Lookup: http://www.legis.state.ia.us/aspx/Legislators/LegislatorInfo.aspx

LISTEN TO THE HEARING ONLINE
You can listen to the public debate online Tuesday night through this website http://www.legis.state.ia.us/Audio/Audio.html and click on house audio.

IOWA GOP ACTION ALERT

IOWA GOP ACTION ALERT

A new message from Matt Strawn, Republican Party of Iowa:

DEMOCRATS PLAN TO ELIMINATE FEDERAL DEDUCTIBILITY AND RAISE TAXES ON IOWANS!

ACTION ITEM:  Join US for a Republican Rally at the State Capitol tomorrow night.

Just when you thought things could not get worse at the Democrat-controlled Statehouse, majority Democrats have hatched a plan to raise income taxes on tens of thousands of Iowans by eliminating your right to deduct federal income taxes on your Iowa income tax return.

What Democrats call “tax reform” we see for what it is:  a blatant attempt to use Iowa’s tax code to play destructive class warfare games and redistribute the wealth.  Their plan would result in big tax increases on the very people on which we are depending to get this state out of our economic slump.

And, for the first time in Iowa history, you would be forced to pay state income tax on money you use to pay your federal income tax.  A tax on a tax is wrong and Iowa Republicans MUST stand together and defeat this job-killing legislation.

Here are TWO big ways you can help stop this bill:

  1. ATTEND the Republican Rally at the State Capitol today.   On Tuesday, March 31, at 7:30 p.m. there will be a public hearing on the proposed bill to eliminate federal deductibility.  We want to pack the House Chamber with hundreds of Republicans to oppose this terrible legislation.

    Republicans are encouraged to gather in the basement of the State Capitol at 6:30 p.m. on Tuesday night to hear from opposition leaders and learn how you can make a difference.  We will then march up to the House Chamber and fill the seats.  If you are able to attend, please send an email to Eric Johansen, our Political Director, at [email protected].

  2. Call your State Representative and State Senator, ASAP.  Let your legislators know you strongly support keeping federal deductibility and OPPOSE raising taxes on Iowa’s job creators.  Here are the numbers for the House and Senate:

Iowa House of Representatives:  515.281.3221
Iowa Senate:  515.281.3371

Don’t know your state legislators?  Click here and use this tool to find out who represents you.

Want to see the actual bill?  Click here to see the actual legislation.

This legislation could be the defining moment of the 2009 General Assembly.  The state checkbook is empty, the savings are nearly gone, the credit card is getting ready for action, and now Democrats are getting ready to stick-up taxpayers for even more.  Enough is enough.

You don’t have to wait until November 2010 to start making a difference.  You don’t have to wait to make your voice heard.  JOIN us at the State Capitol tomorrow, call your legislators, and SHARE this information with other Iowa Republicans.

We can still win this battle.   ACT NOW!

~ ~ ~ ~ ~

The Conservative Reader will be at the Rally and Hearing… look for udpates on Art Smith’s Twitter, and a wrapup here after the hearing!

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