DES MOINES – A group of Iowa senators have introduced a bill that would eliminate a tired tax structure for corporations doing business in Iowa.
Currently, the corporate income tax is imposed in a progressive manner using four income brackets with inreasing rates: on the first $25,000 of income, the rate is 6 percent; on income between $25,000 and $100,000, the rate is 8 percent; on income between $100,000 and $250,000, the rate is 10 percent; on income of $250,000 or more, the rate is 12 percent.
The bill eliminates this tiered bracket and rate structure and imposes the tax at the rate of 6 percent on the corporation’s taxable income. The bill applies retroactively to tax years beginning on or after January 1, 2013.
The bill was introduced by Brad Zaun, from Urbandale.
All this does is reduce the rate of double taxation on corporations. It’s about time.
That would only affect the top rate. The rest of those tiers wouldn’t have stock holders anyway.
Baloney. Some don’t have a lot of shareholders and find other creative ways of paying them their share of dividends and calling it something else that is deductible as an expense because they’re sick of double taxation.
The ONLY way they’re being taxed twice is if they have shares that are taxable. If they are a one or two person business, which accounts for the lower brackets, they do NOT have shares or dividends to pay tax on. Therefore, they are NOT being taxed twice.
Sicastupd, I don’t expect to change your mind but I want to point something out to you. You have stated, “So he wants to lose money for the state? This bill is as stupid as he is.”
Taxes are not a “0” sum game. Just because taxes are reduced does not mean we will lose money. Our state is surrounded by states that have lower business taxes than Iowa. I would make the case that the only business that locates in Iowa is because they have to. If they have locations in several states, Iowa would be the last one they expand because of our taxes. If they would expand in Iowa, each job would contribute another $2,000 to the state income through state taxes. That is just the start, each job contributes to the local community buying goods and services. Lower taxes on business will be a big win for Iowa, we are not competitive now with other states. Why would anyone want to locate here unless they had to?
I know how the system works, John. But my point is that eliminating all the tiers merely puts more in the pockets of high earners – individuals, not businesses.
It doesn’t take much to incorporate. Farmers, small time accountants, attorneys, etc. will all be affected.
These are NOT the people who create jobs. These are individuals. If you want to attract jobs, make a tiered rate that goes DOWN commensurate with jobs created.
This is a dumb proposal – and another give away to his money buddies.
Small corporations like that don’t leave money in the Corp at the end of the fiscal year to be taxed. They pay themselves bonuses and bring income down to a very low figure so there will be no tax due.
So he wants to lose money for the state? This bill is as stupid as he is.