Hatch proposes tax exemption for public pensions

DES MOINES - Democratic gubernatorial candidate Jack Hatch on Tuesday proposed to exempt public pensions from state income taxation.

In a speech to the Iowa State Police Association in Ames, Hatch said his Tax-Exempt Public Service Pensions Act would cover Iowa Public Employees Retirement System benefits, police and fire retirement benefits, judicial pensions and other smaller state, county and city pension system recipients.

'I understand the nature of public employee bargaining,” Hatch said. 'I know the contracts you negotiate include retirement as part of the bargain. You have foregone wage increases and other benefits to guarantee a strong pension, and I will honor that bargain.

'I know most of you are like a lot of public servants in that you could make a lot more money doing something else,” he added. 'I want to make sure we place the proper value on your decision to serve and that we honor the contracts you have made for the long term.”

If victorious in the Nov. 4 election against five-term Republican Gov. Terry Branstad, Hatch said he would include provisions to implement the act as part of the legislative package he submits to the newly seated 86th Iowa General Assembly at the start of the 2015 session in January.

Hatch said Iowa excludes from state income taxes up to $6,000 annually for a single filer and a maximum of $12,000 for a family. Above those numbers, he said police and fire pensions are treated the same as other pension income.

Hatch estimated the proposed tax break for public service workers would cost between $50 million and $60 million per year in reduced revenue to the state's general fund. Federal law requires that federal government pensions receive the same tax treatment as state pensions, so federal retirees will receive the same tax treatment as state pensions, he added.

Tommy Schultz, spokesman for the Branstad-Reynolds campaign, did not address Hatch's proposal specifically, but noted that Branstad 'has a long history of reducing Iowans' tax burden,” most recently having signed 2013 legislation that provided relief to commercial property owners and income taxpayers.

'Gov. Branstad and Lt. Gov. (Kim) Reynolds remain focused on continuing to grow Iowa's economy, create jobs, increase family incomes and restore Iowa's leadership in education,” he said.

Recently, Branstad noted during his weekly news conference that he has not put forward any tax-related proposals during the campaign because he wants to be 'careful and cautious” about committing to more tax relief until revenue estimates confirm the state can afford the multiyear commitments already made.

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