Get serious about tax reform, key Iowa lawmakers say

ANKENY - Key state lawmakers would like to find a way next year to lighten Iowans' tax bills.

Tax reform did not get much of a hearing during the recently concluded 2015 legislative session that was dominated by heated debates over funding public education and roads.

Speaking Wednesday to the Iowa Taxpayers Association during a gathering at Otter Creek Golf Course, a panel of four lawmakers - three of whom sit on the Legislature's tax-writing Ways and Means Committees - agreed the gas tax discussion, in particular, 'sucked the oxygen” out of much of the session, and expressed hope tax reform will get its chance to breathe next year.

But legislators, including Ways and Means chairmen Joe Bolkcom from the Democrat-controlled Senate and Tom Sands from the Republican-controlled House, also revealed the partisan differences that make significant tax reform a challenge.

'We've proven over the last five years that if we have a priority, we can find common agreement,” said Sen. Jack Whitver, R-Ankeny, the lone non-Ways and Means member on the panel. 'Really it's as simple as Sen. Bolkcom and Rep. Sands saying, ‘We're going to work on corporate income tax.' And if they both agree to that, we'll find a solution. I'm confident of that.”

Whitver and Sands, both Republicans, said they would like to reduce or simplify the state's individual and corporate income taxes. Whitver called income tax reform one of the biggest issues facing the state, and Sands agreed it should be a priority.

'Income taxes, going forward, has got to be the most important piece of legislation coming that the state could actually do to spur growth,” Sands said. 'Because cutting the income tax rate, both corporate and individual, puts more money into the hands of the people that earn it, that know how to spend it and manage it more wisely than government.”

Bolkcom, a Democrat, said he would be willing to reduce income taxes, but expressed concern that any such action would create a large dip in state revenues. Bolkcom said he would prefer any tax break to include a provision that offsets potential revenue losses.

Whitver said he trusts any temporary decline in state revenues eventually would rebound once Iowans have more money to spend, but that perspective does not resonate with Bolkcom.

'This idea that if we just cut taxes things will be wonderful … I don't subscribe to that theory that if we just cut everybody's taxes, suddenly we're going to have all this revenue to do all these wonderful things,” Bolkcom said.

Jeff Smith, the president and CEO of the Iowa Taxpayers Association and a Republican state legislator from 2011-14, conceded significant legislation is always a challenge under split-party control government. He said he also holds out hope for next year, when the gas tax issue will be in the state's rear-view mirror.

Smith said his group will develop a plan for broad tax reform and work with lawmakers.

'I'm confident that we can look at ways to simplify things to make things easier on us, to make it more appealing on an economic development standpoint for other businesses from around the Midwest to relocate here or to expand here,” Smith said. 'But I think (lawmakers from both parties) were very clear that the budget is always going to be a concern, so we need to make sure that we're looking at ways to improve our system without having a large fiscal impact. Therein lies the trouble.”