Not the right time to cut Iowa income tax rate

Gazette Editorial Board

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A proposal to slash Iowa's individual income tax rates by 20 percent is alive in the Legislature nearly a month after the House approved it. We don't think the time is right for this idea.

The loss of revenue from a 20 percent income tax rate cut is estimated at $700 million a year. That's a huge portion of the roughly $6 billion state budget. We're skeptical of supporters' contentions that it would spur the economy by putting more money in consumers' pockets. It could help but where is evidence that it would even come close to offsetting the loss of revenue? Neither have we seen reasonable budget cuts identified to make up the gap.

Instead, we fear an income-tax cut's additional impact on vital human services whose budgets were substantially slashed during the recession would be counterproductive. Education could take an undue hit. Pressure to raise local property tax rates would mount.

Better that lawmakers work on revamping property tax formulas that are out of balance, especially for commercial and industrial sectors whose rates at 100 percent of valuation are widely seen as detrimental to investment. Adjustment would make Iowa more attractive for businesses to expand or move here, adding jobs and income taxpaying workers - and ramping up the economic recovery that is slowly unfolding.