‘Everything on the table’ for tax overhaul, Iowa governor says

DES MOINES — With three different state income tax proposals in play, including her own, Gov. Kim Reynolds declined an opportunity Wednesday to put her thumb on the scales.

Reynolds said that “everything is on the table” when it comes to the three tax plans that will ultimately have to become one. She touted her tax plan and fielded questions from reporters during an event at LBS, a publishing and packaging company in Des Moines.

“I’m optimistic we are going to get something done (on tax policy) this year,” Reynolds said. “I think we’ll end up in a good place.”

With a $1.2 billion state budget surplus, plus another $800 million in the state fund for tax relief, and a full budget reserve and emergency accounts, Republicans — who with their majorities pull all the state lawmaking levers — have pledged to cut state taxes.

Reynolds, Senate Republicans and House Republicans each have offered proposals that are similar in many ways, but decidedly different in others. All seek to reduce the state tax on individual workers’ income. Some also reduce the state tax on business income, and one creates a tax shift that triggers funding for the long-empty fund for conservation and water quality programs.

“There has never been a better time for bold yet practical reform,” Reynolds said Wednesday. “We have a great story to tell (about Iowa). So if I can get the (tax) rates competitive, watch out.”

When asked by reporters, Reynolds declined to endorse any of the three proposals or comment on the elements that differ among them. She said she will have those conversations as she and legislative leaders work to agree on one tax plan.

“That’s not a discussion I’m going to have with media,” she said. “We’re going to look at all three bills and see where we end up.”

The House and Senate proposals each received their first legislative hearings Tuesday. Both are scheduled for their second hearings Thursday. If both are approved, they would become eligible for debate by the full Senate and House.

Reynolds’ proposal is not moving through the legislative process, but it is very similar to the House bill.

Supporters of the proposals say lowering Iowans’ income taxes to one rate is fair for all workers, that the business tax rate needs to be lowered to make Iowa more competitive with other states and that funding the conservation and water quality fund will help provide amenities that people look for in choosing a place to live.

Critics of the proposals say flat taxes like those proposed force lower-income workers to shoulder a larger burden than higher-income workers in the funding of government services, and that state revenue would be better dedicated to other services rather than a tax break for businesses.

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