Legislative ideas surface to cut income tax, hike sales tax

DES MOINES - Two separate but major changes to Iowa tax policies will get 'The whole purpose of the bill is to simplify things for the taxpayer and it would actually probably involve a tax cut for a significant number of people,” lawmakers' attention Tuesday - one in the Iowa House would simplify and reduce state income taxes while across the rotunda another plan in the Iowa Senate would raise the state's sales tax to aid natural resources.

A House Ways and Means subcommittee is taking up a proposed two-tiered income tax structure that would allow Iowans to pick the current system with its deductions or pay a simple flat tax rate of 5 percent. House Study Bill 215, if enacted, would be retroactive to Jan. 1, 2015.

'The whole purpose of the bill is to simplify things for the taxpayer and it would actually probably involve a tax cut for a significant number of people,” said Rep. Guy Vander Linden, R-Oskaloosa, leader of the House subcommittee.

Meanwhile, a Senate Natural Resources subcommittee is slated to consider Senate File 357, which seeks to raise the state's 6 percent sales tax by 3/8 of a penny effective July 1, 2016, and transfer the $120 million to $180 million it would generate to the constitutionally protected natural resources and outdoor recreation trust fund approved by voters in 2010.

'The vast number of Iowans supports establishing a trust fund, they support good water quality and they support more outdoor recreation opportunities,” said Sen. David Johnson, R-Ocheyedan, a co-sponsor of the measure. 'I don't want to lose a generation of hunters and anglers because we don't have enough wildlife habitat or we have dirty water out there. That's why I'm going to continue to push forward.”

While the proposals push different ideas and are headed in two different directions, backers have one thing in common: they expect push back from opponents and they don't hold out much hope of either concept making it to Gov. Terry Branstad's desk for his signature this session.

'We are not real optimistic that we'll be able to pass it all the way through the Legislature, but we want to raise the issue of trying to simplify things and, oh by the way, cut taxes as well,” said Vander Linden, who noted the impact on state revenue and the budget would be 'significant” under the income-tax proposal.

'We're just raising the issue, not necessarily saying we think this is going to go all the way to the governor's desk,” he added. 'We want to at least start the discussion, see what people think about it and kind of get some impact from the public as well I hope.”

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said he wanted to see a fiscal note on the House proposal to know the bill's financial impact, but he added 'it seems to me that it's a pretty giant benefit for a very tiny group of people. We're about the middle class, they're about Warren Buffett.”

Likewise, Vander Linden said he did not think raising the state sales tax to 6.375 percent would gain traction in the House if it was able to make it through the Senate.

'I didn't vote to raise the gas tax and I won't be voting to raise the sales tax,” he said. 'We've got one house of the Legislature that thinks we ought to raise taxes from time to time and one that thinks we generally should trend lower. I tend to be with the group that's headed lower.”

Johnson said the concerns raised over water quality in Iowa and other issues have convinced him it's time to direct more state resources to soil and water conservation, parks, REAP, county conservation projects, watershed improvements and water quality programs as voters supported by better than 60 percent via the 2010 ballot issue.

'This is going to happen sooner or later, and I would prefer sooner,” he said.

Gronstal said there seems to be 'some energy” within the Senate in regard to S.F. 357, adding that 'if there are willing partners in the building, in the House and in the governor's office, it's something we'd be open to discussion.”