One of the many advantages of a Quad City location is that it provides you and your company with a choice of state and community options.

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1 One of the many advantages of a Quad City location is that it provides you and your company with a choice of state and community options. The summary table below and the tax discussions that follow provide current data on the principal taxes in the Iowa Quad Cities. Tax Type Sales Gasoline (gallon) $.207 Diesel (gallon) $.225 Ethanol(gallon) $.19 City add-on tax Electricity Natural Gas Telecommunications Property per $1,000 of market value (IA QC average) 5% state/2% local 5% State and 2% Local sales taxes for service use % Exemption allowed for processing use on the state tax only.* 5% State and 2% Local sales taxes for service use % Exemption allowed for processing use on the state tax only.* 5% State and 2% Local Sales Tax applies to Local Service and Intrastate Long Distance charges; 3% Federal Sales Tax applies to local service. $33.55 Unemployment Compensation (new employer rate) 1.0% (for non-construction employers) of the first $20,400 paid each employee (2005 wage base) Average Workers Compensation Iowa s rates are the 9 th nation. lowest in the * Based on an energy study submitted to the local utility and agreed to by the Department of Revenue. Source: MidAmerican Energy

2 PROPERTY TAX Property tax rates vary by area and type of property. The tax rates below are for commercial and industrial property. They are affected by the tax levy in the several taxing districts including municipal, county and school. Iowa figures property tax on assessed value that is equal to 100% of the market value. Within the state of Iowa, machinery and equipment used in the manufacturing process is not subject to local property tax. The table below illustrates current commercial and industrial rates in three key Iowa Quad-Cities communities. An industrial property (including land and building) assessed at $500,000 would pay an average of $16,775 in annual real estate taxes in the Iowa Quad Cities. EXAMPLE: Market value = $500,000 $1, * (IA QC Average Rate/$1000) $ 16,775 Estimated tax PROPERTY TAX Basic tax rate for latest year (per $1000 market value) Locality Bettendorf Davenport Eldridge City $12.35 $15.24 $6.65 School $14.69 $17.10 $15.12 County $5.57 $5.57 $5.57 Other(s) $0.93 $0.92 $0.93 TOTAL $33.54 $38.83 $28.27 PERSONAL PROPERTY TAX The state of Iowa does not levy a personal property tax.

3 SALES AND USE TAX Sales and Use Tax applies to the purchase of selected personal and business products and services but certain products and services are exempt. The chart below shows some examples of sales or rentals that are exempt from tax: In processing. To maintain a manufactured product's integrity or to maintain any unique environmental conditions required for the product. Machinery, equipment and computers directly and primarily used by a manufacturer: To maintain unique environmental conditions required for other machinery, equipment and computers used in processing. Including test equipment used in processing to control the quality and specifications of the product. In research and development of new products or processes of processing. In recycling or reprocessing of waste products. Pollution control equipment used by a manufacturer: Core and mold-making equipment and sand handling equipment: Even when the equipment is not directly and primarily used in any kind of processing. Directly and primarily used in the mold-making process by a foundry. In addition, materials used to construct or self-construct any machinery, equipment or computer in the table above is exempt. Sales of fuel and electricity consumed by machinery, equipment, or computers in the above paragraph are also exempt. Note: Raw materials used to manufacture products are tax exempt. Taxes are figured into the finished product to be sold. Products sold within the state in which said product was manufactured is subject to that state's sales tax. Products sold out of state are tax exempt. For more details on Sales and Use tax exemptions please go to the State of Iowa's web page at or contact the Quad City Development Group.

4 WORKERS COMPENSATION Workers' compensation costs in Iowa are the 9 th lowest in the nation.* The Quad City Development Group will be pleased to research the actual current rate for any of the standard job classifications in your company. For your reference, the table below shows the current rate (per $100 of payroll) for representative job classifications. OC 4299 Printing, Assembly & stapling 3.15 OC 8810 Clerical.32 OC 6504 Food Sundries manufacturing N.O.C OC 3632 Machine Shop N.O.C OC 4484 Plastics manufacturing - molding 4.09 * Source: Mid-American Energy Business Climate Comparison UNEMPLOYMENT COMPENSATION The State of Iowa has the country's lowest Unemployment Compensation rate for new employers. A new employer's rate is 1% (for non-construction employers) of the first $20,400 of each employee's wages or $ per employee, per year. Wage base... $20,400 Minimum rate...0.0% Maximum rate...8.0% New employer's rate...1% * According to the 2005 wage base, new employers in Iowa pay $ annually per employee in unemployment insurance for the first five years. This rate can decline or increase based on the employer s experience in Iowa.

5 CORPORATE INCOME TAX Iowa Corporate Income Tax is levied only on net income derived from sales conducted within the state--single factor formula. If the trade or business is conducted entirely within Iowa, the tax is imposed on the entire net income. If the business activity is conducted partly outside Iowa, the tax is imposed only on the portion of net income conducted within Iowa. Insurance Companies located in the State of Iowa do not pay state corporate income tax. Moreover, corporate tax is imposed only on the net income received or earned after adjustment by 50% of the federal income taxes paid. The tax rate is levied on a sliding scale as follows: First $ 25,000 6% Next 75,000 8% Next 150,000 10% Over 250,000 12%

6 PERSONAL INCOME TAX The basis of Iowa taxable income is the adjusted gross income as reported on the federal income tax return. 1. Allows deductions for Federal Taxes paid. 2. Allow itemized deductions that are similar to Federal itemized deductions. This includes deductions for: a. Real estate taxes b. Home mortgage interest c. Contributions d. Casualty or theft loss e. Medical & dental expenses (expenses over 7.5% of AGI) f. Job and miscellaneous other deductions 3. Allows an exemption tax credit of $40 each for taxpayer and spouse and $40 for each dependent. 4. Taxable income is taxed at the following rate for 2005: Over But not over Tax $ Tax Rate Of Excess Over $ 0 1, (0.36% x 0) 1,269 2, (0.72% x 1,269) 2,538 5, (2.43% x 2,538) 5,072 11, (4.50% x 5,072) 11,421 19, (6.12% x 11,421) 19,035 25, (6.48% x 19,035) 25,380 38,070 1, (6.80% x 25,380) 38,070 57,105 2, (7.92% x 38,070) 57,105 over 3, (8.98% x 57,105) * IMPORTANT NOTE: According to the State Executive and Legislative branches of the Iowa State Government, the effective top rate is 5.75% to 6.25% for personal income tax rates once items 1-4 are factored in.