State legislators are considering a significant change in the way Iowans pay income taxes. Senator Larry McKibben of Marshalltown — the leader of the Ways and Means tax-writing Committee — is proposing a three-and-a-half percent flat tax on Iowans’ income. McKibben calls it the Iowa Income Tax Simplification Bill. McKibben’s plan would gradually erase taxes on Social Security benefits and pension income, too. McKibben says his goal has been to make the plan “revenue neutral” so Iowans’ tax burden remains the same, but he concedes that at the three-and-a-half percent rate, some lower income Iowans could see their income taxes go up.McKibben says he’s only gotten a tentative analysis from the Legislative Fiscal Bureau, the agency that’s been crunching the numbers. McKibben says they were tweaking the rate as late as last night. McKibben says he wants to ensure 10 percent of low-income “working class” Iowans no longer pay income taxes, and he says he’s nearly there. Governor Vilsack Tom praises McKibben for being bold, but he is expressing concerns that the new, one-rate plan would raise taxes on low income Iowans, who he says are least able to pay.He says the concern the “flat tax” proposal generates is that some people’s taxes will go up. House Republicans today introduced a series of bills Representative Jamie Van Fossen of Davenport has labeled “property taxpayer protection initiatives.” He says it’s a good start and fits well with what the governor wants to do.The major reform would allow taxpayers to protest through the courts if their county has a large ending balance, and a judge could order property taxes lowered Van Fossen says some county boards of supervisors are hoarding as much as 100 percent of their annual budget.Van Fossen says that means property owners wouldn’t have to pay taxes for a year, and the county would still operate on the reserve funds.He says he gets upset during the election cycle when people say they’ve raised property taxes at the state level. He says he’s not going to stand back and not doing anything about that. He says he’s going to put the blame or reason where it belongs. One-third of Iowa counties are holding at least 50 percent of their operating budget in reserve.
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