DES MOINES, Iowa (AP) — Iowa is on the verge of implementing sweeping income tax cuts that will have long-lasting effects felt in every corner of the state. Legislation was sent to Republican Gov. Kim Reynolds, who is campaigning for election on tax cuts and is expected to sign the bill.

The cuts would funnel money to the highest-earning Iowans and give a boost to businesses, but most Iowans would see a share of the savings. The cuts are expected to lead to future contentious budget battles in the Iowa Legislature.
Here’s a closer look at what the tax cuts mean to Iowans:
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WHEN DO CUTS START?
The legislation phases in tax changes over several years, but most people would see benefits in two phases. State revenue targets must be met before the second phase, which would happen no earlier than 2023. The initial income tax cuts will begin in 2019, although some benefits, such as allowing teachers to deduct classroom purchases, will go into effect this year.

About two-thirds of next year’s income tax savings will come in the form of larger paychecks, as withholding rates are reduced, according to an analysis of the tax bill by the Iowa Department of Revenue. The rest of the savings will come from larger refunds, or lower tax bills, and so may not end up in bank accounts until April 2020. About 4 percent of people will see their taxes increase.

The second phase of cuts would increase Iowa’s standard deduction and make filing a state tax return easier. Those cuts would be delayed if Iowa’s tax revenues don’t grow at the required rate.
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WHO WILL BENEFIT?
Most middle-class families in Iowa will see a tax cut, but the largest share of the benefits go to the wealthy. A typical family would save enough to pay for a weekly trip to Starbucks for a grande latte. (That married family of four making $48,000 would receive a 10 percent cut worth about $184 a year.)

On average, middle-class families — those making between $30,000 and $100,000 a year — will see tax savings between $86 and $257 next year, based on an analysis by the Department of Revenue. About 93 percent of all middle-class households would see some savings.

Those middle-class households will receive about a quarter of next year’s tax savings, compared to more than 40 percent that goes to the top 4 percent of taxpayers.
About 9,400 Iowans with annual incomes in excess of $1 million will receive more than $62 million in savings, about 15 percent of the total. Half of all Iowa households — those earning up to $40,000 a year — will receive about 7 percent of the 2019 cuts.
In total, about three-fourths of all Iowans would see some sort of tax cut.

Businesses will benefit from deductions for expenses and income, while corporate tax rates are scheduled to be cut in 2021 regardless of economic conditions.

BUDGETS GET SQUEEZED
The state government will bring in about $2.1 billion less over the next six years because of the tax cuts, adding potential stress to tight budgets after back-to-back mid-year spending cuts. After income and business tax changes are implemented in 2021, the nonpartisan Legislative Services Agency estimates state revenue would be reduced by about 4 percent. That doesn’t mean the state won’t have new money, but there will be less available when writing budgets.

Republicans say they’ve left enough money to pay for their priorities and have set aside some funding in case of a downturn. Democrats say bringing in less revenue will translate to bigger cuts to state services. This year’s budget left many area funded at lower levels than in past years. The state’s three public universities, for example, received less new money for the upcoming budget year than they saw cut from this year’s budget.

Average tuition at the universities has gone up more than 3 percent annually in the past decade, with students in certain programs seeing even higher increases. Iowa’s community colleges also have ratcheted up their tuition as state funding has diminished.

SALES TAXES EXPANDED
In addition to squeezing state agencies, Democrats warn that new sales taxes will hurt many lower-income families. The legislation creates new sales taxes on digital goods like e-books and movie downloads, digital subscription services such as Apple Music and Netflix, ride-sharing apps and goods purchased online.

The Department of Revenue estimates more than $867 million in new taxes will be collected over the next six years. That represents about a 5 percent increase in overall sales taxes collected. However, the state’s ability to collect some of the new taxes on digital sales hinges on the outcome of a case before the U.S. Supreme Court. Some online retailers, such as Amazon, already collect Iowa sales tax.

Democrats say some families could end up paying more in new sales taxes than they save on income taxes. That would depend on household income and how much they purchase online. For example, a single parent with two children earning $24,000 would receive an estimated income tax cut of $58 — that’s the same as Iowa sales tax on about $975 in online purchases and subscriptions.

Here is the latest Iowa news from The Associated Press at 5:40 a.m. CDT

NEVADA, Iowa (AP) — Iowa Lottery officials say someone has a $1 million prize waiting to be claimed. The winning numbers were purchased at a Casey’s General Store in Nevada for a prize announced April 11. The winner has until April 11, 2019 to claim the prize.

DAVENPORT, Iowa (AP) — A Davenport man on parole after an earlier conviction for manufacturing methamphetamine at a home with a daycare is facing new meth-related charges. The Quad City Times reports 40-year-old Dale Blumer is charged in Scott County with possession with intent to manufacture methamphetamine, possession with intent to deliver and three charges of possessing ingredients of meth.

LECLAIRE, Iowa (AP) — Housing will replace golfing on scenic land in eastern Iowa as a family sells property they have owned for generations. The Quad-City Times reports that Susan Leander has closed Olathea Golf Course near LeClaire and is putting the nearly 100 acres on the market. A realtor says the goal is to sell the property to someone who’d redevelop it. The Scott County Board recently approved rezoning the area for residential use.

DES MOINES, Iowa (AP) — Iowa is tweaking its new state-funded family planning program that excludes abortion providers such as Planned Parenthood by restoring some eligibility to a large hospital system. Some of UnityPoint Health’s hospitals and clinics could soon participate again in the program under a budget bill passed this month. A key Republican says some lawmakers thought UnityPoint wouldn’t be excluded. Planned Parenthood says the move shows Republicans targeted its organization.

A valuable Powerball ticket purchased at a convenience store in central Iowa on April 11 remains unclaimed. Iowa Lottery spokesperson Mary Neubauer traveled to the Casey’s store in Nevada (Nuh’VAY-duh) on Friday — exactly one month after the drawing. The ticket sold at the store is good for a one-million dollar prize.

“That’s a little unusual for a prize of this size to be unclaimed for that long,” Neubauer said. “So, we’re here at the store just issuing reminders and telling people ‘hey, double-check your ticket.'” The ticket came within one number of winning a jackpot of $89.7 million. Kim Cochran, manager of the Casey’s in Nevada, is fielding questions about the ticket every day.

“All of the customers are coming in and they’re always asking ‘who’s the winner?’ We don’t know…we’d really like to know who it is,” Cochran said. Neubauer says “yes,” they DO have video of the person who purchased the ticket in Nevada. The Nevada ticket was the only one in the country to win a $1 million prize in the April 11 drawing.

The holder of the ticket has until April 11, 2019 to claim the prize at lottery headquarters in Clive. According to lottery officials, in fiscal year 2017, nearly $1.8 million in lotto prizes went unclaimed in Iowa. Money from unclaimed prizes is placed in the lottery’s prize pools for future games and promotions, so it’s still used to pay prizes.

(Radio Iowa)