Iowa workers paid 4.5 percent more in personal income taxes to the State of Iowa in the past five months than in the same five-month period of 2012. Just in November, though, personal income tax payments to the state grew 11.3 percent. Jeff Robinson, a senior analyst for the Legislative Services Agency, says that’s “much better” growth compared to a couple of months ago.
“That’s pretty good for personal income tax and it’s better than it has been doing,” Robinson says. “That’s good news, although personal income tax in a good year will grow 5.5 to 6, even 6.5 percent.”
State taxes paid on the purchase of goods and services also grew by 4.5 percent during the first five months of the state fiscal year.
“That’s about as good as it gets for sales and use tax,” Robinson says.
Sales and use tax payments to the state were up 6.2 percent in November alone. However, overall state tax collections grew a little less than two percent during the first five months of the fiscal year. Legislators and the governor have decided to divert all state casino taxes and tobacco taxes into separate accounts rather than calculate those so-called “sin” taxes as part of overall state tax collections.
“So it’s making growth in the General Fund look smaller than it is,” Robinson says.
Last year, the first $40 million worth of casino taxes had been deposited in the state’s General Fund and the rest was used for other projects, like financing bricks and mortar improvements in state facilities. Now, all of the state’s casino tax revenue will be diverted into other special spending accounts. Last year the state also collected about $120 million in taxes on tobacco products — money placed in the state General Fund and spent on general state operations. Now, tobacco taxes are being diverted “off-budget” and into separate spending accounts. Those moves will increase the amount of money lawmakers can earmark for special projects.