Iowa House GOP advances proposal to make raising taxes harder

DES MOINES — Iowans could get a direct vote on the state’s income tax policy under a pair of constitutional amendments making their way through the Legislature.

On Tuesday, Iowa House Republicans passed a resolution seeking to add an amendment to the Iowa Constitution that would require a two-thirds majority of the Legislature to increase income taxes on individuals and corporations.

The bill, House Joint Resolution 2006, passed the House 61-35 on a party-line vote.

Another resolution in the Senate, which has advanced out of committee and is eligible for a vote in the full chamber, would require a flat individual income tax in the state, prohibiting a progressive tax system that imposes a higher rate on higher earners.

Both chambers are expected to pass the resolutions, said Rep. Bobby Kaufmann of Wilton, the chair of the House Ways and Means Committee. The two initially started as one resolution, but Kaufmann said they were split up to avoid confusion on the ballot.

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The proposals would need to clear more hurdles to be added to the state’s constitution. Constitutional amendments must be passed in multiple years by two separate general assemblies, and then they are placed on the ballot and subject to a popular vote. If the amendment gains majority approval from voters, it is added to the state constitution.

This would be the first time the amendments pass the Legislature. If they pass a second time, voters will likely see them on the ballot in 2026, Kaufmann said.

If approved, the amendments would enshrine Iowa Republicans’ tax-cutting agenda into the constitution and make it more difficult for future lawmakers to raise tax rates.

Several top Republican decision-makers have set eliminating Iowa’s income tax as a long-term goal. Gov. Kim Reynolds said last year she hopes to reduce Iowa’s income tax to zero by the end of her term, which ends in 2026.

Amendment sets high bar for tax increases

The proposal passed by the House would require that two-thirds of the members in each chamber — 67 in the House and 34 in the Senate — agree on any legislation that increases Iowa's income tax on individuals or corporations.

Democrats have been critical of Republican efforts to lower income taxes, saying the cuts disproportionately benefit the wealthy and do not do enough to lower costs and living expenses for low-income Iowans. Democrats argued Tuesday that constraining the ability of the Legislature to increase taxes could backfire if the state experiences an economic downturn and lawmakers are not able to quickly respond.

Adam Zabner, a Democrat from Iowa City, said that if lawmakers are not able to raise income taxes when more revenue is needed, they will turn to other, more regressive taxes like a sales tax. Lower-income people spend a higher portion of their income on sales tax than high earners.

“What this constitutional amendment does is to say next time there’s a budget crunch, we’re going to shift that burden onto the poorest Iowans either by taking away services they rely on or increasing regressive taxes,” Zabner said.

Democrats also said the amendment elevated the short-term interests of Iowa Republicans without taking into account how the state could look in 50 or 100 years.

More than a dozen other states require a supermajority to pass some tax increases. Kaufmann pointed to Democratic-led states that have similar rules in place and said they have fared well even with the restriction.

“The sky did not fall, every example of dystopian future did not happen,” he said.

Flat tax amendment also considered

The resolution to require a flat tax rate in Iowa's constitution passed out of the Senate tax policy committee March 20 with only Republican support. The bill is eligible for a vote in the full chamber. The resolution would require individual income taxes to be imposed at a single rate for all taxpayers.

For now, Iowa has a progressive income tax system with brackets ranging from 4.4 to 5.7 percent. Under tax cuts Reynolds signed in 2022, the income tax will reach a flat 3.9 percent for all earners by 2026.

Republican lawmakers are likely this year to speed up that schedule, though no plan has been agreed to. Kaufmann said they will likely set a flat tax that will take effect this year at a rate that keeps the state's revenue sustainable.

"If we can get down to 3.9 this year, we will, but I suspect there's a chance that we'll be closer to 4 or 4.1," he said.

Reynolds has proposed a bill to set a flat 3.65 percent income tax this year and lower it to 3.5 percent in 2025.