Iowa Republicans propose ‘flat’ income tax option

DES MOINES - Iowans would have the option of eschewing the current income tax filing structure for a flat, 5 percent income tax rate under a proposal approved Tuesday by a panel of state lawmakers.

Three Republicans on an Iowa House subcommittee approved a bill that would allow residents filing their income taxes to choose between two options: the current structure with multiple potential deductions, or with limited deductions and a flat tax rate.

Rep. Guy Vander Linden, R-Oskaloosa, said the proposal is an effort by House Republicans to return more tax dollars to Iowans.

Vander Linden said he anticipates the measure will be approved by the full House, but conceded it is unlikely to be considered in the Democrat-controlled Senate. He said making significant changes to state tax law often takes multiple efforts, citing as an example the 2013 commercial property tax cut.

A similar bill introduced in 2013 that placed the flat rate at 4.5 percent would have reduced state revenues by more than $400 million annually, the state's nonpartisan fiscal estimating agency projected.

The two Democrats on the House committee challenged the wisdom of legislation that would reduce state funds by hundreds of millions of dollars when House Republicans assert the state cannot afford more than a $90 million increase in K-12 education funding.

'We're being told that money is not available for other priorities (like education),” said Rep. Chuck Isenhart, D-Dubuque.

The Iowa State Education Association opposes the legislation for the same reason, said lobbyist Brad Hudson.

Vander Linden said he appreciates the Democrats' concern for the short term, but added he believes the program would be beneficial in the long term. He said lower taxes would put more money into the state's economy and spur job growth, which eventually would lead to higher tax revenues.

Vander Linden also said the income tax proposal could be viewed as an effort to offset the impact of the state's recent move to increase the gas tax by 10 cents per gallon.

'Certainly those of us who voted against the gas tax would like to see taxes go down in some form,” Vander Linden said.