Report, Week 4

Iowa House of Representatives
State Representative

Lee Hein

Address: State Capitol, Des Moines, IA 50319
Phone: (515) 281-7330
follow on Twitter @iahouserepubs

Income and Property Tax Relief Measures on the Move

House File 4, which calls for a 20% across the board cut to individual income tax rates, was unanimously approved by subcommittee last week. The last major tax relief measure signed into law was a 10% across the board cut in 1997.

According to a study by the Tax Foundation, Iowa is ranked in the bottom ten for individual income tax rates. Iowa received low scores due to high rates and a progressive bracket structure.

According to the Tax Foundation these states have the worst business climates: CA, MN, IA, OH, NY, NC, MD, NJ, RI, CT

According to the Tax Foundation study these ten states have the best tax climates: MT, AK, NV, WY, SD, IN, NH, TX, FL, DE

States that do not impose an individual income tax received high scores, as well as states that have a flat, low tax rate with few deductions and exemptions. States that scored poorly have complex, multiple rate systems.

The bill was approved on a bipartisan vote in full committee and now moves to the floor of the house.

House Study Bill 41, which establishes a school district property tax relief supplement for Fiscal Year 2012, was also approved on a bipartisan vote in full committee and will move to the floor of the house.

The previous two legislatures have not fully-funded allowable growth, thus pushing the burden to Iowa property tax payers. If the House passes zero percent allowable growth while fully-funding it, there still is property tax impact of $70 million.

Of that $70 million, $47 million of the increase would come from the budget guarantee. This bill would address the budget guarantee portion and protect Iowa property taxpayers from the full increase. The budget guarantee last year totaled $25 million, and the increase for FY 2012 is projected to be $22 million for a total of $47 million.

The Department of Management will notify each school district the amount they will receive and an appropriation will be made from the general fund. In addition, school districts that receive a property tax relief supplement are prohibited from levying additional property taxes, and the money must be used in the same manner and purpose that property taxes would have been used for.

Federal Health Care Law Ruled Unconstitutional

The much-anticipated ruling of a Florida court in the multi- state challenge to the federal health care reform law arrived on Monday. The Florida court threw out the entire law and

put the Obama administration‟s plans for implementation into question.

As many legal experts anticipated, Judge Roger Vinson found that the law‟s provision requiring all Americans to have health care coverage violated the Constitution‟s limits on federal power over commerce. But these same experts were surprised that the judge focused on a factor that has not been as prominent in the discussion over the individual mandate – regulating inactivity.

Vinson found that the law was setting up federal regulation of inactivity, in this situation the decision by Americans to not purchase health insurance or sign up for Medicaid. Judge Vinson made an interesting analogy in discussing his belief that Congress‟s actions went beyond the founders‟ intent:

It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place.

The Hudson ruling had found the individual mandate was unconstitutional, but allowed the rest of the bill to move forward. To the surprise of many legal scholars, Vinson threw out the whole law, because the bill lacked a severability clause.

Without the severability clause, Judge Vinson ruled that the unconstitutionality of the individual mandate rendered the whole bill unconstitutional. While Vinson threw out the whole bill, he did not issue an injunction to stop the federal government and the states from implementing the provisions of the bill. This means the Obama administration is free to continue implementation of the bill.

The decision has created confusion amongst the states as to their next move. In Wisconsin, Attorney General JB Van Hollen has said for his state the federal law is “dead.” But Wisconsin governor Scott Walker has been silent about the ruling. In other states, officials continue to move forward with implementation.

Governor Releases Plan for Iowa Partnership for Economic Progress

On Monday, Governor Branstad released his proposal to reorganize the current Department of Economic Development. The new plan, called the Iowa Partnership for Economic Progress, creates a new public-private collaboration.

The Economic Progress Authority is the „public‟ portion of the public-private collaboration. The Authority would take the place of the current department and would assume all duties and responsibilities. This includes the ability to receive appropriations from the General Assembly, to provide advice and services for the purpose of economic development, and to make awards of financial assistance.

The Economic Progress Corporation is the „private‟ portion of the public-private collaboration. The new Corporation will be a nonprofit that qualifies as a 501 (3) (c) under Federal law and a 504 under Iowa law. The Corporation is not to be considered an agency, department or administrative unit of the state. This also means that the Corporation cannot receive appropriations from the General Assembly. The Corporation is being established so that donations and bequests qualify as tax deductible under federal and state income tax laws.

The Economic Progress Board is the third component of the new arrangement. The Board is to be chaired by either the Governor or the Lieutenant Governor and contains seven other voting members who are from the private, for-profit sector of the economy. These members are appointed by the Governor, confirmed by the Senate, and will serve four year terms. This Board also acts as the governing body for the Authority as well as the board of directors of the Corporation.

Recap of Week 4

Being away from home this week has been especially challenging. With the weather as it has been I know that there is plenty of work that I could have been doing on the farm. Taking care of livestock has always been a passion of mine and I look forward to returning to the farm this weekend.

In the House I voted in favor of the bill allowing Iowans to vote on the definition of marriage. I also voted in favor of a bill protecting Iowans from the mandate and fines of the new national healthcare law which requires individuals to purchase health insurance or face penalties from the gov‟t.

This Saturday, I will be meeting with the Iowa Education Association in Dubuque for a breakfast forum. On Saturday, Feb 12, I will be attending a forum with the Jones County Farm Bureau in Olin from 9am–10am. The event will be held at Selma‟s Cafe and is open to the public. Please come with any comments, questions or concerns you may have about agriculture or any other issues affecting the state.

As always, you can contact me at or (515) 281-7330. Also, if you are ever in Des Moines make sure you stop by the Capitol to visit.

Sincerely, Lee Hein

%d bloggers like this: