Senate File 351 - Introduced SENATE FILE 351 BY CHELGREN , ZAUN , DIX , WHITVER , BACON , HAHN , BEHN , HOUSER , ANDERSON , HAMERLINCK , SEYMOUR , ERNST , BERTRAND , SORENSON , and McKINLEY A BILL FOR An Act relating to the tax rates imposed on corporations and 1 including retroactive applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2353XS (3) 84 tw/rj

S.F. 351 Section 1. Section 422.33, subsection 1, Code 2011, is 1 amended by striking the subsection and inserting in lieu 2 thereof the following: 3 1. a. A tax is imposed annually upon each corporation 4 doing business in this state, or deriving income from sources 5 within this state, at the rate of six percent of the net income 6 received by the corporation during the income year. 7 b. For purposes of this section: 8 (1) “Income from sources within this state” means income 9 from real, tangible, or intangible property located or having 10 a situs in this state. 11 (2) “Net income” means the net income as calculated in 12 section 422.35 and determined to be reasonably attributable to 13 Iowa pursuant to subsections 2 and 3. 14 Sec. 2. Section 422.33, subsection 1A, Code 2011, is amended 15 to read as follows: 16 1A. There is imposed upon each corporation exempt from 17 the general business tax on corporations by section 422.34, 18 subsection 2 , a tax at the rates rate specified in subsection 1 19 upon the state’s apportioned share computed in accordance with 20 subsections 2 and 3 of the unrelated business income computed 21 in accordance with the Internal Revenue Code and with the 22 adjustments set forth in section 422.35 . 23 Sec. 3. Section 422.33, subsection 4, unnumbered paragraph 24 1, Code 2011, is amended to read as follows: 25 In addition to all taxes imposed under this division , 26 there is imposed upon each corporation doing business within 27 the state the greater of the tax determined in subsection 1 , 28 paragraphs “a” through “d” or the state alternative minimum tax 29 equal to sixty percent of the maximum state corporate income 30 tax rate, rounded to the nearest one-tenth of one percent, of 31 the state alternative minimum taxable income of the taxpayer 32 computed under this subsection . 33 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 34 retroactively to January 1, 2011, for tax years beginning on 35 -1- LSB 2353XS (3) 84 tw/rj 1/ 2

S.F. 351 or after that date. 1 EXPLANATION 2 This bill relates to the tax rates applied to corporations. 3 Currently, the corporate income tax is imposed in a 4 progressive manner using four income brackets with increasing 5 rates: on the first $25,000 of income, the rate is 6 percent; 6 on income between $25,000 and $100,000, the rate is 8 percent; 7 on income between $100,000 and $250,000, the rate is 10 8 percent; on income of $250,000 or more, the rate is 12 percent. 9 The bill eliminates this tiered bracket and rate structure and 10 imposes the tax at the rate of 6 percent on the corporation’s 11 net income attributable to Iowa. 12 The bill applies retroactively to tax years beginning on or 13 after January 1, 2011. 14 -2- LSB 2353XS (3) 84 tw/rj 2/ 2