United Group Insurance

Senate Republicans propose 30 percent cut in Iowans’ personal income taxes

News

February 21st, 2018 by Ric Hanson

Republicans in the Iowa Senate have unveiled a bill that would cut taxes for individuals and corporations in Iowa by one BILLION dollars.  Senate Republican Leader Bill Dix, of Shell Rock, said “This is just a unique opportunity that we have today to really put Iowans in the drivers seat, especially after the federal tax changes that were made…This just shines that beacon of opportunity on Iowa as a great place to grow.”  Dix spoke exclusively with Radio Iowa this (Wednesday) morning. He says the reductions would be immediate — for tax year 2019 — and INDIVIDUALS would see their income taxes reduced by 30 percent. “The largest decrease in income tax rates in state history,” Dix says.

The bill includes what Dix calls “indexing” that would keep reducing personal income tax rates gradually over time. Over a three year period, CORPORATE income taxes also would be reduced from 12 percent down to seven percent. “It is a bold proposal, a proposal that will bring growth to our state,” Dix says, “new opportunities for Iowans.” Senate Republicans propose phasing out nearly all state tax CREDITS and they would get rid of the state tax DEDUCTION for federal taxes paid. Dix says these moves will “dramatically simplify” the state’s taxes. “It is an exciting day, an exciting day because one of the things that I actually promised voters in my district and the entire Senate Republican Caucus has promised to Iowans is that we would reduce their income tax,” Dix says.

Democrats who’ve been expecting a G-O-P tax cut proposal to emerge this year warn Iowa could wind up with huge state budget deficits like Kansas, where income taxes were cut in 2012. Dix says Kansas policymakers failed to “manage their spending.”  “We’re going to take that very seriously and not overspend,” Dix says.  This past fall, Republicans investigated sales tax exemptions and considered doing away with some of them. The proposal released today (Wednesday) instead seeks to collect state sales taxes on every purchase possible — including from on-line purchases.  “The retailer is the one that is acting as the collector,” Dix says. “One the internet, those companies have not always acted in a manner to collect that tax.This would direct those companies to do so.”

Some retailers, like Amazon, have voluntarily begun submitting sales taxes to the state when Iowans make purchases online. The tax plan Governor Kim Reynolds released last week called for phasing in tax cuts over a six year period — with a trigger that would delay the cuts if the economy worsens. The Senate Republican plan does not include that limitation.

(Radio Iowa)