House Study Bill 223 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED GOVERNOR’S BILL) A BILL FOR An Act relating to the tax rates imposed on certain gambling 1 establishments and corporations and including retroactive 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2671XL (3) 84 tw/rj

S.F. _____ H.F. _____ DIVISION I 1 TAXATION OF GAMBLING GAMES 2 Section 1. Section 99F.11, subsection 2, Code 2011, is 3 amended by striking the subsection and inserting in lieu 4 thereof the following: 5 2. The tax rate imposed each fiscal year on any amount of 6 adjusted gross receipts over three million dollars shall be 7 thirty-six percent. 8 DIVISION II 9 CORPORATE INCOME TAX RATE 10 Sec. 2. Section 422.33, subsection 1, Code 2011, is amended 11 by striking the subsection and inserting in lieu thereof the 12 following: 13 1. a. A tax is imposed annually upon each corporation 14 doing business in this state, or deriving income from sources 15 within this state, at the rate of six percent of the net income 16 received by the corporation during the income year. 17 b. For purposes of this section: 18 (1) “Income from sources within this state” means income 19 from real, tangible, or intangible property located or having 20 a situs in this state. 21 (2) “Net income” means the net income as calculated in 22 section 422.35 and determined to be reasonably attributable to 23 Iowa pursuant to subsections 2 and 3. 24 Sec. 3. Section 422.33, subsection 1A, Code 2011, is amended 25 to read as follows: 26 1A. There is imposed upon each corporation exempt from 27 the general business tax on corporations by section 422.34, 28 subsection 2 , a tax at the rates rate specified in subsection 1 29 upon the state’s apportioned share computed in accordance with 30 subsections 2 and 3 of the unrelated business income computed 31 in accordance with the Internal Revenue Code and with the 32 adjustments set forth in section 422.35 . 33 Sec. 4. Section 422.33, subsection 4, unnumbered paragraph 34 1, Code 2011, is amended to read as follows: 35 -1- LSB 2671XL (3) 84 tw/rj 1/ 2

S.F. _____ H.F. _____ In addition to all taxes imposed under this division , 1 there is imposed upon each corporation doing business within 2 the state the greater of the tax determined in subsection 1 , 3 paragraphs “a” through “d” or the state alternative minimum tax 4 equal to sixty percent of the maximum state corporate income 5 tax rate, rounded to the nearest one-tenth of one percent, of 6 the state alternative minimum taxable income of the taxpayer 7 computed under this subsection . 8 Sec. 5. RETROACTIVE APPLICABILITY. This division of this 9 Act applies retroactively to January 1, 2011, for tax years 10 beginning on or after that date. 11 EXPLANATION 12 This bill relates to certain tax rates applied to gambling 13 establishments and corporations. 14 Division I of the bill sets a single tax rate of 36 percent 15 on the adjusted gross receipts over $3 million from gambling 16 games authorized under Code chapter 99F. The current Code 17 provision applies different tax rates of either 22 percent or 18 24 percent on adjusted gross receipts over $3 million, based 19 upon certain provisions. 20 Division II of the bill relates to corporate income tax 21 rates. Currently, the corporate income tax is imposed in a 22 progressive manner using four income brackets with increasing 23 rates: on the first $25,000 of income, the rate is 6 percent; 24 on income between $25,000 and $100,000, the rate is 8 percent; 25 on income between $100,000 and $250,000, the rate is 10 26 percent; on income of $250,000 or more, the rate is 12 percent. 27 The bill eliminates this tiered bracket and rate structure and 28 imposes the tax at the rate of 6 percent on the corporation’s 29 net income attributable to Iowa. 30 Division II applies retroactively to tax years beginning on 31 or after January 1, 2011. 32 -2- LSB 2671XL (3) 84 tw/rj 2/ 2