The 2006 Iowa Legislature has enacted a package of tax cuts that benefit Iowa’s elderly. The bill gradually erases state income taxes on Social Security benefits over the next eight years and increases the amount of pension income an Iowa senior may receive before taxes are assessed.
Representative Jamie Van Fossen, a Republican from Davenport, says it’s been a long-time goal for him.
“We join 30-plus other states that don’t tax Social Security,” Van Fossen says. “It’s probably something we shouldn’t have done in the first place.”
Van Fossen also advocates not charging state taxes on seniors’ pension income. “We’re moving in the right direction,” Van Fossen says of the increased amount of pension income Iowans may earn before paying taxes. “I always look at my glass at being half full instead of half empty, so I’m excited.” Van Fossen is the chairman of the House Ways and Means tax-writing Committee.
The Democrat who’s co-chairman of the Senate’s Ways and Means Committee is less enthusiastic about the tax cut. Senator Joe Bolkcom, a Democrat from Iowa City, says it’s not good news for younger Iowans who’re in the middle class. “We’re simply going to see a shifting of taxes from seniors to working families,” he says.
Bolkcom says under current law, a family of four with a 35-thousand dollar annual income pays almost four-times as much in state taxes as an elderly couple that makes 35-thousand dollars a year. “It isn’t lost on anybody here that seniors do vote and go to the polls in greater numbers than, say, people (who) are working, age 30 to 40,” Bolkcom says. “Middle income Iowans…didn’t get any tax cuts this year.”
Bolkcom says 70 percent of Iowans over the age of 65 don’t pay any state income taxes now on their Social Security, and the tax cut lawmakers passed benefits only 140-thousand Iowa households.