(Radio Iowa) – Republicans on a senate committee have voted to phase OUT the state inheritance tax. The bill also would accelerate the plan to phase IN state income tax cuts. Democrats oppose the moves, warning the state’s budget could take a billion dollar hit in a couple of years. Senator Pam Jochum, a Democrat from Dubuque, says the original plan in 2018 put guard rails in place, so income tax cuts were only triggered if total state tax revenue rose to certain levels.

“So that deep cuts were not going to be required on public safety — we would not have to defund the police,” Jochum said, “that we would be able to meet our obligations on educating our children and all those other services and programs that Iowans need.”

Senator Dan Dawson, a Republican from Council Bluffs, says for Iowa to be more competitive, the tax burden must be lowered. “It’s permanent tax relief for a vast majority of Iowans who earn income in our state,” Dawson says. And Dawson says the state doesn’t have a compelling interest to collect inheritance taxes. “Whoever you choose to give your money to in the end after you pass from this Earth, it’s between you and the individual and not some concocted, morbid, 24-page section of code that says that you can do this at 0% or give it to this person at 15%.”

Under current Iowa law, lineal descendants — that would be children, grandchildren and great grandchildren — pay no income tax on inherited property. Brothers, sisters and inlaws pay between five and 10 percent, while uncles, aunts and cousins could pay up to 15 percent.