Capitol Notebook: Accelerated income tax cuts proposed

DES MOINES — Iowa already is on a path to reducing the state income tax rate to 3.9 percent by 2026.

That phased process would accelerate, and the rate would be lowered to 2.5 percent by 2028 under legislation advanced Wednesday by state lawmakers.

The proposal comes just a year after Gov. Kim Reynolds signed into law a gradual reduction in working Iowans’ state income taxes, which started this year. Under that new law, all Iowa income taxpayers will have a 3.9 percent income tax rate in 2026.

Iowa Sen. Dan Dawson, R-Council Bluffs, on Wednesday unveiled his proposal to speed up that process and take the income tax rate even lower.

Under his bill, Senate Study Bill 1126, Iowa would have a 4 percent state income tax rate in 2025, 3.55 percent in 2026, 2.95 percent in 2027, and 2.5 percent in 2028.

From there, the bill says Iowa’s income tax rate should be continually reduced until it is eliminated.

“We can’t be complacent. We must continue to ensure we have a competitive tax code here in this state,” Dawson said Wednesday during a subcommittee hearing on the proposal.

The current law is projected to eventually lead to a $1.8 billion reduction in state income tax collections — which means a reduction to state revenues in that same amount. That’s roughly a quarter of Iowa’s annual general fund state spending.

Currently, the state income tax accounts for just less than half of Iowa’s general fund budget. Dawson said he is confident that if the state phased out the income tax, it would still have enough revenue to fund state government and all its programs and services.

Sen. Herman Quirmbach, D-Ames, who was on the panel, was much less confident that state government will be able to function properly if Dawson’s bill becomes law. He said if the bill is enacted, eventually the state would have to make cuts to public education, public safety and other services.

“This bill, the only thing that I can call it is fiscal fentanyl. All it’s going to do is it’s going to kill Iowa faster,” Quirmbach said.

Dawson and Sen. Jason Schultz, R-Schleswig, supported advancing the bill to the full Senate committee on tax policy.

School administrators must teach

School administrators at some of Iowa’s largest school districts would be required to teach a semester-long class under a bill advanced by a three-member House education subcommittee.

The bill provides that school districts containing two or more high schools, three or more middle schools, or four or more elementary schools shall require certain administrators, including school superintendents and building principles, to provide semester-long classroom instruction to students at least once every three years.

Bill sponsor Rep. Robert Henderson, R-Sioux City, said the intent “is to get administrators more acquainted with what’s happening in the classrooms.”

Rep. Molly Buck, D-Ankeny, declined to sign off on the bill, echoing concerns from education groups representing school administrators, teachers, school boards and rural school advocates — all of whom are registered against the bill.

No group is registered in support of the legislation, according to state lobbying records.

Lobbyists for education groups say the bill is logistically problematic, and that there are better ways to get administrators in the classroom through observations and participating alongside teachers in curriculum training and professional development.

Several noted school administrators in Iowa already serve in many roles throughout their district, including teaching classes when a substitute is unavailable, driving a school bus, serving lunch and coaching.

House File 454 is now eligible for consideration by the full committee.

Non-budget and non-tax policy bills must pass out of full committee by a Friday “funnel” deadline to be considered yet this session.

Loosened gun regulations

Schools, college campuses, businesses, casinos and corrections facilities would be barred from prohibiting guns in vehicles in their parking lots under legislation advanced by Republican lawmakers.

Senate Study Bill 1168 is similar to a bill that has been moving in the House. The Senate version was approved by Republicans on a three-member subcommittee, and is now eligible for consideration by the full Senate Judiciary Committee.