April 24, 2014

Senate sends governor a bill containing tax break for Knoxville Speedway

The Iowa Senate has given final legislative approve to a plan that would give the Knoxville Raceway a tax break to help finance an upgrade of the facility. Senator Bill Dotzler, a Democrat from Waterloo, says the track already has a $50 million annual economic impact on the state.

“They’re marketing it as a ‘dirt track heaven’ and it really is in Iowa,” Dotzler says. “It’s a special, special place.”

Over 200,000 people visit the track in Knoxville each year, but Dotzler says with NASCAR driver Tony Stewart’s recent investment in a dirt track in Ohio, Knoxville needs to keep up with the competition.

“This bill would allow them to move forward with a planned project,” Dotzler says. “They plan to add new suites, a main entranceway to the facility and additional seats that would modernize the facility and really keep Knoxville as the premiere place in America to race sprint cars.”

If  Governor Branstad signs the bill into law, the Knoxville track would get a rebate of sales taxes charges on goods and services sold at the track from 2015 ’til 2025. However, the total rebate could not exceed $2 million and it is also limited to 25 percent of the total cost of the facility upgrade project. Senator Randy Feenstra, a Republican from Hull, is a racing fan who supports the bill.

“If you ever get to the Knoxville Nationals or the Knoxville Speedway, it’s one of the funnest things you’ll ever do and we get to do it in Iowa,” Feenstra says. “It’s one of our own precious jewels that we have here.”

The bill passed the Senate on a 39-10 vote. A few weeks ago Governor Branstad went to Newton to sign a bill that provided a similar tax rebate to NASCAR, the new owners of the Iowa Speedway.

Grassley says IRS needs to update its fraud detection system

One week after our 2013 federal tax returns were due, Iowa Senator Chuck Grassley is criticizing the Internal Revenue Service for its antiquated fraud detection system. An investigation is still underway after several dozen employees at the University of Northern Iowa discovered earlier this year that their tax information had fallen victim to tampering. “Identity theft to commit tax fraud is a $5-billion per year problem,” Grassley says. “The IRS puts taxpayers at risk for fraud by using inadequate systems and delaying a better system.”

One report finds the IRS paid more than $5 billion in potentially fraudulent tax refunds on 1.5 million returns in tax year 2010. Grassley, a Republican, says there’s no excuse for those monumental errors. “It’s an even bigger concern if the new system isn’t in place by the time the number of people filing tax returns increases under Obamacare next year,” Grassley says. “That’s going to be a big problem for IRS.”

Grassley says the federal health care plan allows for refundable credits, which he says are especially vulnerable to fraud, and millions of new taxpayers will be filing returns next year thanks to the Affordable Care Act. “So IRS better get on the ball and get this taken care of,” Grassley says.

The agency’s current Electronic Fraud Detection System may not be operable beyond 2014, he says, while the new system, the Return Review Program, has been under development for five years and still isn’t ready to roll out. It’s being designed to automate many tax fraud detection tasks that are now performed by employees.

Microsoft to build second data center in West Des Moines

Microsoft has been identified as the company behind another big economic development project in West Des Moines. The company will build a $1.1 billion data center on a 154 acre site in Polk County.

Governor Terry Branstad was in West Des Moines for the announcement, made shortly after the Iowa Economic Development Authority approved just over $20 million dollars in sales tax rebates for the project. “Iowa has been very fortunate in the last few years to have numerous economic development projects worth over one billion dollars; Facebook, MidAmerican Energy’s Wind Farm, CF Industries, and Iowa Fertilizer,” Branstad said.

Microsoft already has a data center in West Des Moines, so the company’s total investment in the area will now reach nearly $2 billion. “That is an all-time record (for the state),” Branstad noted.

The City of West Des Moines has promised $53 million in infrastructure improvements to accommodate the site. Mayor Steve Gaer  said it’s well worth the investment. “The economic impact of this project alone, when it’s fully developed, will be over 8 million dollars a year in property taxes to the city, county and school district,” Gaer said.

Polk County Supervisor Angela Connolly said the data center will be huge, covering a space comparable to roughly 20 football fields. “The project will firmly establish central Iowa as one of the country’s leading technology environments and with the addition of over 80 jobs, will certainly bring new talent to our community,” Connolly said. Microsoft officials have pledged the project will eventually create 84 jobs, most of which will pay a wage of at least $24.32 an hour.

Construction on the project is expected to start this spring.

Branstad releases his 2013 income tax returns, plus a letter from his doctor

Branstad tax returnsRepublican Governor Terry Branstad has released the state and federal tax returns he and his wife have filed, revealing the couple reported taxable income of almost $235,000.

Branstad’s salary as governor is just over $127,000 and he got about $55,000 from his state pension for his 30 years of service as a state legislator, as lieutenant governor and for his first four terms as governor. Branstad and his wife, Chris, own 13 rural post office buildings and collected $64,000 in rent last year, plus the Branstads reported income from investments and from an IRA willed to Branstad by an uncle who died recently.

The couple donated just over $40,000 to charity in 2013. That’s 17.2 percent of their total income. Reporters were allowed to read through Branstad’s tax returns this morning, as well as  read a short letter Branstad’s doctor wrote after the governor’s last physical in late February. The doctor said he found the 67-year-old Branstad “to be in good health” and the doctor said he had “no concerns” regarding Branstad’s “health and capacity to work.”

Jack Hatch, the only Democrat running for governor, released his 2013 tax returns as well as a letter from his doctor yesterday. Hatch reported he and his wife — who are property developers — had about $469,000 in income last year. Jack and Sonja Hatch paid over $88,000 in federal income taxes and almost $29,000 in state income taxes.  Terry and Chris Branstad paid $28,000 in federal taxes and $6200 in state taxes.

Hatch releases information about his personal finances & his health

The Democrat who is running for governor of Iowa has released the state and federal tax returns he and his wife have filed, revealing taxable income of nearly $469,000 during 2013.

State Senator Jack Hatch of Des Moines — the only Democrat running for governor — is a property developer.  Hatch allowed reporters to view his tax returns and the documents show Hatch and his wife, Sonja, paid over $88,00 in federal income taxes and almost $29,000 in state income taxes. The couple donated over $19,000 to charity in 2013. That’s about four percent of their total income.

Jack and Sonja Hatch own two companies. One develops properties. The other manages apartments. The couple also has partnerships in seven different real estate developments in Des Moines and Cedar Rapids. Hatch will later release an estimate of his net worth.

Hatch also has released a letter from his doctor today, saying Hatch is in “generally good health.” Hatch had a physical last week.  The doctor said the 64-year-old candidate has had an elevated cholesterol level as well as a family history of high blood pressure, but those are “well controlled” with medication.

Governor Terry Branstad plans to release the details of his income tax returns tomorrow. Branstad’s reelection campaign this morning challenged Hatch to release his tax returns for the past five years — Branstad has made his own returns public during that time period. Hatch’s campaign manager says the senator is releasing his returns from the previous year.

Branstad’s campaign spokesman Tommy Schultz suggests Hatch is “deeply worried” about something in his past tax returns.  Branstad made his opponent’s tax returns a major issue in the 1982 campaign.

Senator Grassley says fouled up tax system is depressing

The deadline for filing federal tax returns is one week away and Iowa Senator Chuck Grassley says today’s tax code is a “monstrosity” that’s far too complicated and is a drag on the nation’s economic growth, not to mention our patience. “The IRS says it takes an average taxpayer 13 hours to comply with the federal tax code,” Grassley says. “Every year, Americans spend more than $168 billion and collectively clock in six-billion hours to file their taxes.”

Grassley says he gets “very, very depressed” when he considers how fouled up our tax system has become and he hears constituents’ complaints on the topic all the time. “People come to my office and they say ‘We need tax reform, but don’t touch my part of the tax code,’” Grassley says. “They don’t actually say it that way but that’s the implication. That makes me pessimistic when you have every economic interest is for tax reform but ‘don’t effect ours,’ that’s a zero sum gain and it’s hard to get anything done.”

Grassley, a Republican, says one thing we’ve never tried is throwing out the entire tax code and starting over. “But in 1986, there was big progress made in tax reform and the trouble is, within five years, in a very slow process that brings us to the monstrosity we have today,” Grassley says. “It’s back probably worse than it was in 1986 when we started reform then.”

He says taxpayers already pay enough to shoulder the costs of the federal government. Grassley notes, the Affordable Care Act will raise taxes more than $700 billion over the next decade.

No traction for increasing state gas tax

It appears lawmakers will adjourn the 2014 session of the Iowa Legislature without taking action on proposals that would have raised additional money to maintain and expand the state’s transportation system.  House Speaker Kraig Paulsen, a Republican from Hiawatha, says those who’ve been lobbying for an increase in the state gas tax have gained no traction.

“I don’t think anything’s changed in that dialogue this session,” Paulsen says.

Efforts over the past few years to raise the state gas tax have fallen short and last fall the Iowa DOT’s director developed a list of other alternatives, like getting rid of the tax exemption for fuel used in farm machinery, to raise funds for roads. None of those alternatives have been endorsed by a legislative committee and Governor Branstad did not include the proposals in his own budget plan. Representative Josh Byrnes, a Republican from Osage who supports increasing the gas tax, suggests now would be a good time for Branstad to change his tune.

“What the governor’s office should do, if they want to divert attention from this other conversation, they should come out in support of the fuel tax,” Byrnes says.

Branstad’s administration is under scrutiny for alleged “hush money” payments to laid off state workers.

Senate Republican Leader Bill Dix of Shell Rock does not sense a groundswell for a gas tax increase.

“I believe that what you’re seeing happen in the Iowa Senate is that people are listening and while attitudes may be changing about that, at the moment they’re not hearing a strong message from the vast majority of their constituents to make those changes,” Dix says.

Representative Byrnes says Republicans in one of the counties in Dix’s district called for an increase in the gas tax in their party platform.

“I don’t get why he’s been so anti, against this when his own constituents are wanting it,” Byrnes says.

Senate Democratic Leader Mike Gronstal of Council Bluffs has said if a gas tax hike is to pass, it must get bipartisan support in both the House and the Senate.

“I personally believe we need additional in the Road Use Tax Fund and, if that’s going to happen, it requires a meeeting of the minds,” Gronstal says. “…If we get to that, I am still open to considering (a bill to increase the gas tax) this session.”

Byrnes says he’s frustrated by those comments from Gronstal.

“If you know that we need to do this and you know that it needs to be done, then quit putting up this stupid requirement that says you need to have 12 Republicans in favor of it out of the Senate,” Byrnes says. “If you get 10, take it. It’s still a bipartisan vote.”

In November Governor Branstad said raising the gas tax is “not popular” with Iowans. State transportation officials estimate they are $215 million short of what’s needed to maintain and build new roads and bridges.  Iowa’s gas tax hasn’t been raised since 1989.

(Reporting & editing by Radio Iowa’s O. Kay Henderson; additional reporting by Darin Swenson of KDEC in Decorah)