For more on corporate taxes, see Kyle's recent study "U.S. Multinationals Paid More Than $100 Billion in Foreign Income Taxes."
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- Pumpkin Tax in Iowa Is Gone
Pumpkin Tax in Iowa Is Gone
A week ago, we first blogged on the fact that the state of Iowa had a very odd tax treatment of pumpkins whereby if they were used for consumption (i.e. pumpkin pie), you paid no tax; but if they were used for decorations or other non-food purposes, you paid the state sales tax on the item.
Well it turns out that the blogosphere response to our initial post has led Iowa officials to reconsider this policy.
Here's the full story courtesy of the Des Moines Register:
Here's a Halloween riddle: What happened when Iowa Department of Revenue officials tried to tax pumpkins?
They got squashed.
Administrators announced Wednesday that they were backing off a policy of charging sales tax on pumpkins intended for use as jack-o'-lanterns.
The decision came after The Des Moines Register reported the state's claim that the big orange gourds did not qualify for the food exemption because they generally are used for decoration.
The department said it announced the policy last year, but it acknowledged that many people didn't notice until Wednesday, when the story whipsawed around the Internet and drew scads of derisive comments.
Even as it rescinded the policy, the department issued a news release defending its original reasoning. "Food and food ingredients are defined as substances that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value," the release said.
The statement didn't say why the department changed its policy, but the controversy apparently spooked Gov. Chet Culver.
He issued his own statement after administrators went public with their reversal.
"It has come to my attention that a policy change made in December of 2006 - before I took office - is resulting in this ridiculous pumpkin tax," Culver said.
"I have directed the Department of Revenue to do the common-sense thing and suspend collection of this tax and offer refunds to consumers or retailers who have been affected."
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