Iowa Senate GOP: Flatten, then end income tax

cigaretteman

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May 29, 2001
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Morans:

The state tax on Iowans’ income would be lowered to 3.6 percent over five years for all filers and eventually phased out altogether under a tax proposal unveiled Wednesday by Republican lawmakers in the Iowa Senate.


The Senate GOP tax plan also would eliminate the state tax on retirement income, reduce the state tax on businesses and eliminating some tax credits and exemptions. And it would put funding into the long-starved state fund for recreation, conservation and water quality programs.


When fully implemented, the plan would result in total taxpayer savings — and thus a reduction in state revenues — of roughly $2 billion, Senate Republicans said. The current state budget is just more than $8 billion.


Sen. Dan Dawson, a Republican from Council Bluffs and chair of the Senate’s tax policy committee, said the legislation accomplishes the goals he and his colleagues set for changing Iowa’s tax laws.


“One was to return the money back to taxpayers that is clearly over-collected. Two, to use that money when returning it to build back a better tax code. And three, what’s our vision going forward,” Dawson told reporters Wednesday. “I think this bill that we’re going to produce meets all three of those goals.”


The Senate Republican plan would:


  • Gradually reduce state income taxes over five years until, in 2027, there is a flat rate of 3.6 percent. Currently, the highest state income tax rate in Iowa is 8.53 percent, and lower-income workers pay gradually lower rates.

  • Restructure the state taxpayer relief fund into a fund dedicated to eventually eliminating the state income tax.

  • Gradually reduce the state corporate tax rate over six years until, in 2028, large businesses pay a 7.8 percent rate, down from the current 9.8 percent, and small businesses would pay 5.3 percent.

  • Eliminate the state tax on retirement income including pensions and annuities.

  • Enact a shift in tax collections to fund the state’s Natural Resources and Outdoor Recreation Trust Fund. The fund was established by Iowa voters in 2010, but state lawmakers in the dozen years since have not enacted the required sales tax increase to fund the program.

Jack Whitver, the Republican Senate majority leader from Ankeny, said he believes the proposal aligns with the tax plan that Republican Gov. Kim Reynolds’ proposed earlier this month.


Reynolds’ plan called for a four-year transition to a 4 percent flat income tax, the elimination of the state tax on retirement income, and a reduction of the state corporate tax rate. She did not propose this year a mechanism to fund the state recreation, conservation and water quality trust fund, but she had in a 2020 proposal.


Majority House Republican have not yet unveiled their tax plan.


“I have been very clear: Our tax plan will not raise taxes for any Iowan,” House Speaker Pat Grassley, a Republican from New Hartford, said in a statement. “Iowa House Republicans will be releasing a tax plan very soon that is similar to the governor’s plan and is simple, responsible and cuts taxes for all Iowans.”


Republicans hold majorities in both the Iowa House and Senate, which along with a Republican in the governor’s office gives them unfettered control of the state lawmaking process.


Sen. Zach Wahls, leader of the minority Senate Democrats from Coralville, called Senate Republicans’ tax plan “another tax giveaway to millionaires and big corporations.”


“The Republican plan would result in higher taxes for hardworking Iowans and the defunding of public education, public safety and health care services,” Wahls said in a statement. “Senate Democrats are focused on putting more money into the pockets of hardworking Iowans. That includes targeted tax cuts for middle class families, expanding access to affordable child care and paid family leave, fully funding our schools, and making job training and apprenticeships available and affordable for all Iowans.”


Whitver said Senate Republicans’ tax plan would not impact state spending because of current surpluses in the state budget.


According to the state’s nonpartisan fiscal services agency, there is projected to be more than $1 billion in the taxpayer relief fund, and the general budget fund is projected to contain in excess of $1.2 billion. In addition, the state’s reserve funds are flush with more than $800 million.


The lost revenue from proposed tax cuts “can be absorbed by the current amount of money we’re taking in,” Whitver said. “We’re at a point where we can’t afford to not do tax cuts.”


Whitver said he plans for the Senate tax plan to start working its way through the legislative process next week, and that he hopes it will be passed early this legislative session. The legislation was not yet officially filed as of Wednesday evening.

 
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MitchLL

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If Iowans are really lucky, Kimberly will resign ASAP. I suspect she has some health issues and wants to go out in a "blaze of glory".
 

soybean

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I'm anxiously waiting for four details...

#1 - What exactly will be considered "retirement income"?

#2 - What would all of this mean to property tax?

#3 - What would the sales tax rate become?

#4 - What about fees and licenses? What will the tags on my car or pickup be?
 
May 27, 2010
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Unless there's a substantial increase in the standard deduction or an income exemption in this plan, there will absolutely be an increase in taxes for those who earn the very least. So unless Fat Assley can show otherwise, he's essentially full of crap, but maybe he's too dumb to realize it.
 

NorthernHawkeye

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I'm anxiously waiting for four details...

#1 - What exactly will be considered "retirement income"?

#2 - What would all of this mean to property tax?

#3 - What would the sales tax rate become?

#4 - What about fees and licenses? What will the tags on my car or pickup be?

This bill looks promising. Like the idea of not taxing retirement income. Saw the other day that it may apply to pensions and/or 401K accounts.

Of course #2, #3, and #4 would need to stay in check.
 
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brownd7949hawks

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I'm anxiously waiting for four details...

#1 - What exactly will be considered "retirement income"?

#2 - What would all of this mean to property tax?

#3 - What would the sales tax rate become?

#4 - What about fees and licenses? What will the tags on my car or pickup be?
Why do you care? You think the government has a right to your money. You should pay happily.
 
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sober_teacher

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This bill looks promising. Like the idea of not taxing retirement income. Saw the other day that it may apply to pensions and/or 401K accounts.

Of course #2, #3, and #4 would need to stay in check.
Question I have to ask is whether they plan to reduce spending, rely on federal support, or how to compensate for the loss of revenue.
 

h-hawk

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Just saw a story on CNN about an Alabama town that made money by ripping off blacks who drove through town. Basically arresting them for no reason but to fine them. An expert said that taxes in the state do not bring in enough income and that though this is an outrageous example, this practice is widespread because towns need the money. Welcome to Iowa in a few years?
 
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Just saw a story on CNN about an Alabama town that made money by ripping off blacks who drove through town. Basically arresting them for no reason but to fine them. An expert said that taxes in the state do not bring in enough income and that though this is an outrageous example, this practice is widespread because towns need the money. Welcome to Iowa in a few years?
Damn CNN stays on script.
 
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dekhawk

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Tennessee has no state income tax. My Nashville property taxes are 1/3 of a comparable Iowa city value home. Sales tax is 9.75%. We get lots of tourists to help pay the bills. Iowa won’t have that luxury. Public schools here are very bad, poor local roads, few sidewalks.
 

MitchLL

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Question I have to ask is whether they plan to reduce spending, rely on federal support, or how to compensate for the loss of revenue.
You must have forgotten how Kimberly governs. The education budget will be slashed and tuition will go thru the roof.

Then, she'll misspend Fed $$$ and when caught, declare a bookkeeping error.
 
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Keehawk

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DNR fund doesn't get funded and state has a surplus: God damn Kim Reynolds!!!!!

DNR fund gets funded and taxes are lowered: God damn Kim Reynolds!!!!!!
 

abby97

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Just saw a story on CNN about an Alabama town that made money by ripping off blacks who drove through town. Basically arresting them for no reason but to fine them. An expert said that taxes in the state do not bring in enough income and that though this is an outrageous example, this practice is widespread because towns need the money. Welcome to Iowa in a few years?
Who would've thought someone on this board playing the race card.
 

Pete in LA

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Iowa should move in this direction if at all possible. As someone who lives in one of the highest taxed states and cities in the US it doesn't really matter how much money you bring in. It's how you spend it. CA could tax everyone at 100% and we would still be sliding down the ranking by any objective measurement you want to pick. Amazing thing about reducing taxes and streamlining regulations is it always gives you increased economic activity. Is that a good thing? Usually it is and it allows for all types of innovations and opportunities for the people living there. I would agree that some of the low tax or no tax states also have unique situations that allow them to do that. Nevada, Florida with tourism or Texas, Alaska with oil. Not saying Iowa could get down to a zero tax but any movement at all is going to move the needle in the neighborhood. Iowa starts to look really attractive as a place to move your business or operations. I've been thinking about coming back anyway.

 

sober_teacher

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Reduce services.
Then I pass on this. Feels like they’ve already cut services to the bone.
Iowa should move in this direction if at all possible. As someone who lives in one of the highest taxed states and cities in the US it doesn't really matter how much money you bring in. It's how you spend it. CA could tax everyone at 100% and we would still be sliding down the ranking by any objective measurement you want to pick. Amazing thing about reducing taxes and streamlining regulations is it always gives you increased economic activity. Is that a good thing? Usually it is and it allows for all types of innovations and opportunities for the people living there. I would agree that some of the low tax or no tax states also have unique situations that allow them to do that. Nevada, Florida with tourism or Texas, Alaska with oil. Not saying Iowa could get down to a zero tax but any movement at all is going to move the needle in the neighborhood. Iowa starts to look really attractive as a place to move your business or operations. I've been thinking about coming back anyway.


The problem I have with this is that Republicans aren’t looking to streamline regulations, they just want to cut every single one they can. Their mindset seems to be that all regulations are bad. And I certainly agree that too much regulation can be bad, but so can too little.

Iowa currently has a major problem with polluted waterways, be it rivers lakes or streams. Yet Iowa GOP has made little or no effort to address that.
 

BrunoMars420

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I’m all in for the tax cuts. Good job Kimmy Kat. It will be interesting on the deets but in theory I like what is being laid out. Let’s legalize some weed now!
 
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HawkRCID

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Alright fine, let’s also cut: sales tax, property tax, vehicle and gas tax while we are at it.

And get rid of the DOT, police, etc.

Just privatize the road system….they would be in a lot better shape.
 

Pete in LA

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The problem I have with this is that Republicans aren’t looking to streamline regulations, they just want to cut every single one they can. Their mindset seems to be that all regulations are bad. And I certainly agree that too much regulation can be bad, but so can too little.

Iowa currently has a major problem with polluted waterways, be it rivers lakes or streams. Yet Iowa GOP has made little or no effort to address that.
I have no idea what the Iowa GOP is like currently. All of my experience with them is based on involvement back in the early 80's and primarily around the Quads. That said, there very well might be a problem with funding the protection or monitoring of Iowa waterways or wetlands. The overarching concern I have with governments at all levels and particularly with state and local governments is transparency and objective measurable goals tied closely to the funding and administration of programs.

I can tell you as someone who is living the nightmare that is Southern California and LA in particular there is absolutely zero accountability or transparency regarding any program, agency or department. California has a budget of something like $220 billion/year compared to Iowa at $9 billion/year and I can tell you by any objective metric Iowa is blowing past CA. Present day California has very little resemblance to the state I moved to 20+ years ago.

 

HawkRCID

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^^^
Triggered
That post was a bit of hyperbole. I would actually like to see all income tax disappear and make it a significant national sales/consumption tax.

You want to buy a 10 million dollar boat? Great, but you’re going to pay 2 million in tax on it.
 

joelbc1

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you can’t always get what you want!
DNR fund doesn't get funded and state has a surplus: God damn Kim Reynolds!!!!!

DNR fund gets funded and taxes are lowered: God damn Kim Reynolds!!!!!!
WHEN does the DNR get properly funded, keehawk? That seems to be the divide here. Water quality on Iowa is lacking but the Farm Bureau and Iowa GOP have defunded/underfunded the DNR because the DNR sees ground water pollution as a major problem in Iowa.
Costs at Iowa’s regent schools have skyrocketed over the past 40 years...and Iowa’s support of these increases has not been close to adaquate.
 

BrunoMars420

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Costs at Iowa’s regent schools have skyrocketed over the past 40 years...and Iowa’s support of these increases has not been close to adaquate.
I think it’s you that always rail about clean water in Iowa. What are your thoughts on Kimmy Kat investing in that?
 

NorthernHawkeye

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Costs at Iowa’s regent schools have skyrocketed over the past 40 years...and Iowa’s support of these increases has not been close to adaquate.

I expect they'd receive a lot more support if they hadn't turned partisan. The employees and administrators have no one to blame but themselves.
 
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CaboKP

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On the surface I like the idea, but want to know more about the details. When looking at different legislation I see how it will affect me first, then come to a conclusion about how I believe it will affect others.

I do think roads are a major issue, but a lot of that can also be attributed to city spending and priorities. In CR we've had the extra penny tax for a long time and I haven't noticed any positive change.

Having a wife in education, I see that as a huge shortfall as well. Schools seems to get hit with so many regulations, but the help is in short supply. Soapbox comment: crappy parents seem way more common than 10 years ago and kids are much more bold than they used to be. It doesn't seem like the school has much for options in dealing with the troubled kids.

Maybe fix those things before the tax cut...guess we will see.
 

joelbc1

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you can’t always get what you want!
I expect they'd receive a lot more support if they hadn't turned partisan. The employees and administrators have no one to blame but themselves.
Who turned partisan, Northern?
Branstad was never a friend of Regent schools. By its very nature, higher education and government will always be at administrative loggerheads...that battle will never end. Not at “public universities and colleges” any way.
 

joelbc1

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you can’t always get what you want!
I think it’s you that always rail about clean water in Iowa. What are your thoughts on Kimmy Kat investing in that?
It is NOT enough and it’s really late. Clean water just is not a priority for Iowa Republicans. For us in DSM, we are getting ready to spend a whole lot of $$$ On machines to remove nitrates from our drinking water, that comes to us from the Raccoon River and the nitrate problem has been isolated for the most part from 3 counties in NS Iowa. And that is going to raise water rate prices for damn near 1 million Iowans here in central Iowa.
 

HawkRCID

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It is NOT enough and it’s really late. Clean water just is not a priority for Iowa Republicans. For us in DSM, we are getting ready to spend a whole lot of $$$ On machines to remove nitrates from our drinking water, that comes to us from the Raccoon River and the nitrate problem has been isolated for the most part from 3 counties in NS Iowa. And that is going to raise water rate prices for damn near 1 million Iowans here in central Iowa.
Are you saying you want to try to infringe upon the freedom of hardworking farmers? They have a right to farm and make a living you know?

All I took from that post is you’re against farming…..if you don’t love it leave it eh? Here in Iowa we like our water like we like our fields….full of fertilizer….
 

BioHawk

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Ah, the magic money fairy method of funding states. Love it.

Sorry Iowa, you don't have the tourist income southern states do to replace income taxes.
 

chalupa81

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Waukee, Iowa
Get some money back by making 80/35 a toll. Put up a facility north/south/east/west of Des Moines then one east/west of Iowa City. Make it free for Iowa plates and hit all the truckers driving on our roads. Then we can funnel some of that back into services that will be cut when they take away all the revenue because lowering the tax rate isn't going to bring in any additional revenue.
 

BrunoMars420

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Feb 14, 2016
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It is NOT enough and it’s really late. Clean water just is not a priority for Iowa Republicans. For us in DSM, we are getting ready to spend a whole lot of $$$ On machines to remove nitrates from our drinking water, that comes to us from the Raccoon River and the nitrate problem has been isolated for the most part from 3 counties in NS Iowa. And that is going to raise water rate prices for damn near 1 million Iowans here in central Iowa.
What is enough money?
 

joelbc1

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Sep 5, 2007
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you can’t always get what you want!
Are you saying you want to try to infringe upon the freedom of hardworking farmers? They have a right to farm and make a living you know?

All I took from that post is you’re against farming…..if you don’t love it leave it eh? Here in Iowa we like our water like we like our fields….full of fertilizer….
I knew there was a reason why Iowans are such happy sumbitches!