DES MOINES — A slight majority of Iowans favor tax changes similar to the plan Gov. Kim Reynolds has proposed that would raise the sales tax to pay for mental health and other services and reduce taxes on income and property.
That’s according to a poll released today by Iowans for Tax Relief. The poll found that 51.8 percent of Iowans surveyed said they would support a plan to cut income and property taxes while increasing the sales tax rate by a penny.
By a wider margin, 57.4 percent said they agree with the governor’s plan. It calls for shifting the cost of mental health services from counties, which rely on property taxes, to the state, which would use revenue from income and sales taxes to pay for those services.
Reynolds has launched a statewide tour to build public support for her Invest in Iowa plan to revamp Iowa’s tax code and provide a reliable, sustainable funding source for mental health services and quality-of-life improvements that are part of the Natural Resources Trust Fund approved by voters 10 years ago.
“We are seeing the same positive support in town halls across the state, and I look forward to continuing the conversation about the Invest in Iowa Act,” Reynolds said about the poll. “Iowans want lower income and property taxes. They want us to invest in priorities like mental health, water quality, and quality of life. People have supported these ideas for years. Now we have an opportunity to get it done.”
She described public response as “just phenomenal” when she taped an appearance on Iowa PBS’ “Iowa Press” last week.
Legislators, so far, have not shown the same enthusiasm.
“It’s a very difficult process to work through,” House Speaker Pat Grassley, R-New Hartford, said about the plan. “Is there a willingness to raise the sales tax? That’s where it starts. And then, if you do, what do you do with it? It’s a big piece of legislation.”
But Reynolds thinks the plan will gain traction in the Legislature.
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“I think Iowans are going to ultimately be the ones to convince (legislators) to do it,” Reynolds said.
Although her plan calls for a 1-cent increase in the state sales tax, “it’s an overall tax reduction” because of cuts to property and income taxes, Reynolds said. A 1-cent sales tax increase would raise about $540 million, according to a Department of Revenue estimate.
“I had no interest in raising taxes,” she added. “So I said from the get-go, if we’re going to take a look at finally funding the (natural resources) trust, then it has to be an overall net tax reduction, and the bill does that.”
Reynolds’ tax plan contained in the Invest in Iowa Act would implement a two-step income tax cut to take Iowa’s top personal rate down to 5.5 percent in 2023, reduce the mental health property tax levy, and raise sales taxes by 1 cent, funding the voter-approved Natural Resources Trust Fund.
A December report released by Tax Education Foundation Iowa and The Buckeye Institute modeled four tax scenarios that each increased the sales tax, while reducing income tax rates. Each scenario revealed “clear benefits to Iowa’s economy and substantial tax savings for families and businesses,” according to Iowans for Tax Relief.
“Reform requires serious choices by taxpayers about how we’d prefer to pay for government if we don’t like the current level of income taxes,” said Chris Ingstad, president of Iowans for Tax Relief. “The Legislature and the governor have an opportunity to work together to define a vision for how our entire tax system can be improved in a way that serves the long-term interests of Iowans.”
The poll found that when it comes to tax relief, 40.5 percent of Iowans said their first preference would be to lower income taxes. Lowering property taxes was the first choice of 38.3 percent, and 13.7 percent favored a sales tax decrease.
Reynolds’ plan had majority support across the state — 65 percent in rural areas, 60 percent in large cities, 53 percent in suburbs and 52 percent in small towns, according to the poll.
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Calling landlines and mobile phones, Clout Research conducted the survey of 865 registered voters Feb. 10-13. The survey has a 3.33 percent margin of error.
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