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Compromise Tax Policy Bill Heads To Gov. Branstad

John Pemble/IPR
Iowa State Capitol

A compromise tax policy bill passed the Iowa House and Senate Tuesday and will now go to Governor Branstad for his consideration.    

The bill matches up the Iowa tax code with federal law at a cost of nearly $100 million to the state treasury.  

Backers say farmers and small businesses have enjoyed a tax break on major purchases in the past.  

They bought machinery expecting that this year, so there was an outcry when Democrats and the Governor wanted to change course.   

“I had a conversation with a farmer this weekend, about the difference in his taxes,” said Rep. Gary Worthan (R-Spirit Lake).  

The farmer in question received a $30-thousand tax bill, three times bigger than expected.

“A lot of our farmers had to file their incomes taxes before the first of March,” Worthan said.  “He borrowed that money to pay the tax.”

The farmer and others will file amended returns if Governor Branstad signs the bill.

Goveror Branstad initially said the state can’t afford the tax break, but he and the Democrats agreed to it for one year only.  

Some Democrats object to approving the tax bill while schools still await a decision on school aid.

"We have half-a-million students waiting for us, urgently waiting for us -- not for this bill,” said Rep. Sharon Steckman (D-Mason City).  

“I cannot in good conscience support a bill that further limits our ability to fund public education,” said Rep. Cindy Winckler (D-Davenport).

Backers say it’s a matter of fair tax policy.

"This is about how Iowans are able to spend their own money," said Rep. Matt Windschitl (R-Missouri Valley).

The compromise bill also gives manufacturers a new $22 million sales tax exemption which was less than Republicans wanted.