While much of the tax-related discussion in the legislature thus far has focused on property taxes, House Speaker Christopher Rants says he and his fellow republicans will “walk into the trap” democrat Governor Tom Vilsack has set on income taxes. Vilsack outlined a tax reform proposal in December that includes simplifying income taxes by reducing the number of rates or brackets, getting rid of the deduction for federal taxes paid and eventually eliminating state taxes on Social Security and pension income. “The governor has set and baited a trap for republicans with his income tax proposal,” Rants says. “He won’t admit that’s what he did but that’s what he did.” The reason? Republicans have long sought to end the state income tax on pensions. The G-O-P charges it makes Iowa uncompetitive with surrounding states that do not tax pensions. Rants says the “spring to that trap” is that Vilsack’s income tax reconfiguring would probably raise taxes on Iowans who earn more than 40-thousand dollars a year. Rants says that would create “class warfare.” He expects republicans will try to rework the income tax bracket changes to ensure income taxes don’t go up. Rants says he’s interested in reducing the number of income tax rates or brackets from nine to four, as Vilsack suggests, but he says republicans come at it from a different perspective from the governor. Vilsack’s plan would continue to collect the same amount of income tax dollars from Iowans, but some Iowans would pay more according to Rants. Rants says republicans want to change the system and ensure certain Iowans don’t wind up paying more. “It’s a nice trap the governor built. We’ll walk into it. We’re going to try to avoid having it sprung on us and see if we can’t come up with a better solution than what the governor has laid out,” Rants says.
