The debate over how to effectively tax property in Iowa has raged for years. A new report from the Iowa Fiscal Project (IFP) compares and contrasts the property tax reform proposals put forward by the Iowa House and Senate. The report was described in this Des Moines Register editorial with high praise: “No matter which approach prevails, the Iowa Fiscal Partnership deserves credit for an unbiased examination of the impact of the competing property tax proposals on real businesses in Iowa.”
Currently, commercial property taxes are based on 100 percent of their actual values. Residential property is treated very differently. IFP reports that most recently residential property was assessed at just 52.8 percent of actual value. This disparity is something that Governor Branstad, the Iowa House and Senate are working to address. The Senate bill would create a property tax credit which would ultimately mean that some commercial property would be taxed like residential property. The House bill (which has the support of Governor Branstad) would ultimately tax commercial property at 80 percent of its actual value. In its report, IFP raises important questions about how local governments will be reimbursed for the resulting reductions in a significant local government revenue source should either bill become law. The Senate bill provides more targeted tax relief to corporations, whereas the House bill provides a property tax reduction to all businesses.
It could be that this issue gets put on hold for yet another year because Senator Joe Bolkcom (chair of the Ways and Means Committee) is vowing, as he has before, that no compromise on a tax bill will be reached until an increase in Earned Income tax Credit (EITC) is signed into law.
After a year in which tax issues dominated national policy debates, President Barack Obama has signaled that immigration issues will be at the forefront of his legislative agenda in 2013. With immigration reform evidently gaining momentum, some old tax-related bugaboos are sure to resurface as the debate gets underway: in particular, some have argued that undocumented immigrants pay no taxes to states or to the federal government.
A couple of years ago, the Institute on Taxation and Economic Policy (ITEP) worked with the Immigration Policy Center to assess the truth of this claim. Our finding? Far from being tax avoiders, undocumented families pay many of the same regressive taxes that hit all low-income families at the state and local level. We estimated that nationwide, undocumented families paid about $11 billion in state and local taxes in 2010.
The main reason for this is that the sales and excise taxes that fall most heavily on low-income taxpayers don't depend on your citizenship status. Anytime you buy a cup of coffee, a pair of jeans or fill up your tank up with gas, you're paying state and local sales and excise taxes. There are also property taxes, including for renters, who pay them indirectly because landlords frequently pass some of their property tax bills on to their tenants in the form of higher rents. And, many undocumented taxpayers have state income taxes withheld from their paychecks each year.
The bottom line? Even if there were 47 percent of the population paying no taxes (and there isn’t), undocumented immigrants would not be among them. In fact, to find people who don’t pay taxes, take a closer look at the wealthiest among us.
Happy Halloween to our readers!
In honor of the spookiest of all holidays, we want to start by sharing this recent Wall Street Journal piece called Meet One of the Super-PAC Men which profiles Missouri’s Rex Sinquefield, the masked financier behind of one of the scariest state tax policy proposals around -- eliminating Missouri’s income tax and replacing it with increased sales tax revenues.
Word is that fracking taxes, income tax cuts, bank “tax reform” and possibly privatizing the Ohio Turnpike could all be priorities for Ohio’s ghoulishly anti-tax governor, John Kasich. Given the Governor’s track record of supporting tax cuts above all else, we are more than a little afraid about what is to come in the Buckeye State.
Kansas Governor Sam Brownback recently proposed a “property tax transparency” plan which will prevent automatic property tax increases when property values rise. But this proposal leaves local governments who depend on the property tax at the mercy of a zombie math formula. Brownback’s plan should spook all the citizens who depend on local government services.
This one will send a shudder up the spines of supply-siders who want to cut taxes on businesses and the wealthy under the guise of economic development. The Wisconsin Budget Project is reporting on a national poll which found that a “majority of small-business owners believe that raising taxes on the top 2% of taxpayers is the right thing to do.” On this issue, anyway, it looks as though the good goblins are giving Grover a run for his money!