Agricultural Asset Transfer Tax Credit Moves Ahead
On Wednesday, April 11, 2018, the House Ways & Means Committee was scheduled to considered House File 495. The bill extends the beginning farmer tax credit program established in 2013 that was scheduled to sunset on January 1, 2018 to January 1, 2023. Since this legislation did not proceed in 2017 session, the codified automatic repeal occurred. Consequently, the Ag Asset Transfer Tax Credit program reverted back to its form prior to the 2013 legislation and was subject to a cap of no more than $6-million a year.
I am the subcommittee chair for the bill and the floor manager. As part of the process we created a substitute amendment that adds back to the Beginning Farmer Agricultural Asset Transfer Tax Credit program several functions.
It reset the tax credit cap for the Agricultural Asset Tax Credit program to an annual $9-million amount. This is $3 million higher than the current, and pre-2013 legislation level of $6-million, but below the $12-million a year cap in effect between 2013 and through 2017.
A veteran beginning farmer incentive is recreated on the ag asset transfer tax credit of 1% for the first year of an agreement. Hence for the first year of an agreement for cash rents non-veterans earn 5% and 6% for veterans but all participants earn 5% in subsequent years. Likewise for commodity share basis leases agreements veterans qualify for 16% for the first year of the agreement and non-veterans earn 15% as do veterans in second and subsequent years of the agreement.
The aggregate amount that a taxpayer could receive each year is reduced from $50,000 to $25,000.
Public Hearing on Governor’s Tax Bill
This week as part of the House Ways and Means Committee I listened to comments from the general public in a hearing held on Monday night in the old Supreme Court chamber. The hearing was on House Study Bill 671—the Governor’s tax reform proposal.
The bill proposes to cut individual income taxes starting next year by reducing rates and increasing the standard deduction. It also couples with provisions in federal tax code related to 529 plans and teacher education expenses. The Governor’s proposal includes future tax rate cuts that are tied to revenue triggers and the phasing out of federal deductibility.
The House tax bill reduces Iowan’s income taxes by $139 million in Tax Year 2019 and $298 million in Tax Year 2020. An average Iowa taxpayer will see their income tax reduced by 8.9% an 90% of middle-class Iowans that will see their state income tax liability reduced.
House Study Bill 671 also proposes to modernize the sales tax code and tax things like ride sharing, online marketplaces, and subscription and streaming services.
The public hearing attracted speakers on different parts of the bill—but an overwhelming amount of comments came from people representing banks and credit unions. Neither one of those groups were directly affected by the proposal, but numerous showed up to give comments.
News from District 96
This week both John Harms and Joe Yedlik were here with the County Fair Associations. I enjoyed seeing both of them and visiting about issues important to the Jones County Fair.