Articles Tagged: Taxes

A proposal that would shift sales taxes in Iowa and, in the process, finally finance the state fund for conservation and water quality projects appears to be on life support at the Iowa Capitol.

Proposed income tax cuts are on the move, and work on the next state budget has started earlier than normal.

The bill, one of three GOP tax relief plans under consideration, would phase in a four-year gradual reduction in Iowa’s personal income tax rate from the current top rate of 8.53 percent for the highest wage earners to 4 percent for all taxpayers.

Similar to previous hearings, speakers on Monday were divided between those who said a flatter tax rate would make Iowa a more attractive place for businesses and employees, and those who said the plan benefits the wealthy while doing little to help lower-income workers.

As state lawmakers consider tax cuts, an Iowa senator claims, “Data has long shown the states with low or no income tax grow more quickly than states with high, punitive tax rates.” Academic consensus is less certain.

Gov. Kim Reynolds said Wednesday that “everything is on the table” when it comes to three competing tax plans that will ultimately have to become one.

The feedback from various business groups, conservative tax policy organizations, and water quality and environmental advocates was not unanimous, but certainly largely in support of Republican state legislators’ varied proposals to lower the state tax on income to a single rate; reduce the state tax on businesses; and create a shift in taxes that provides funding for the long-starved state fund for conservation and water quality projects.

Republican leaders in both the Senate and House have said they expect to move quickly on the legislative process for their respective plans, likely starting each next week.

Jack Whitver, the Republican Senate majority leader from Ankeny, said he believes the proposal aligns with the tax plan that Republican Gov. Kim Reynolds’ proposed earlier this month.

Iowans’ income from retirement programs would no longer be taxed by the state under a legislative proposal from Iowa House Republicans.

“I want to get it right, so we we're looking at the language to make sure it does what the intent was to do (because) really what we’re trying to do is not tax retirement income,” Gov. Kim Reynolds said while at Van Meter in Cedar Rapids.

In four years, every Iowan’s income would be taxed at 4 percent under a new proposal from Gov. Kim Reynolds, who introduced her proposed flat tax during her annual condition of the state address to the Iowa Legislature this past week. Flat taxes have their fair share of both supporters and critics.

A four-year transition to a flat state income tax rate of 4 percent, shorting the time Iowans could claim jobless benefits and a new plan for devoting public K-12 for private school tuition are among the proposals introduced Tuesday night by Iowa Gov. Kim Reynolds in her charge to state legislators.

Solon residents approved an extension and expansion of the city’s local-option sales tax in November. The main reason voters were asked to consider the expansion was a new $4.2 million fire station.

Big state surplus has them pushing reform, but others urge caution