Democrats in the Iowa House and Senate are poised to debate a sweeping income tax plan, perhaps as early as today. The bill cleared a House committee Monday. The Senate Ways and Means Committee approved it on Tuesday. Senator Joe Bolkcom, a Democrat from Iowa City, is chairman of that tax-writing panel.
"Here’s why we think we need to do it and make this important reform," Bolkcom says. "Our current tax system is unfair to working Iowans and especially to middle class families." But the bill has vocal critics, some of whom swarmed the statehouse Tuesday night at a public hearing that dissolved into a shouting match. Jeff Bean of Cedar Rapids was curt with legislators when he was given a chance to speak Tuesday night.
"Frankly I’m a little irritated that I’ve had to take time away from my business, away from my family to show up and represent the opposition and the disdain I have that this bill…is somehow good for Iowa," Bean said. Barb Knight of Cedar Rapids told legislators she and her husband are entrepreneurs who won’t be able to hire more workers if their taxes go up.
"I feel this bill would be a detriment to my family’s current financial situation and my small business’ potential for growth and expansion," Knight testified Tuesday night. The crowd was dominated by opponents of the Democrats’ plan and they clapped for Knight and others who shared their views. At first, they booed Christian Fong of Cedar Rapids, president of a non-profit group that’s working on flood recovery projects, but then switched to applause after Fong said this.
"I’m not a partisan. I deal with facts. The fact is this plan will raise taxes. It would raise taxes on Iowans already hurting in disaster areas and already hurting in a recession," Fong said. Republican critics says detailed reviews of the Democrats’ tax plan show taxes on some Iowans who earn less than $10,000 will see their taxes go up, while some Iowans who earn more than $100,000 will see their taxes go down.
Democrats say the plan will provide tax relief or keep taxes stable for two-thirds of Iowans. Representative Paul Shomshor, a Democrat from Council Bluffs who is chairman of the House Ways and Means Committee, stresses that the plan cuts nine lines out of the Iowa income tax form.
"We think it’s simplification for the Iowa tax code," Shomshor says. But Republicans like Representative Tom Sands of Columbus Junction complain most Iowa households with an annual income above $125,000 will see an increase in their state income taxes. "If you go out and ask most families that have two or three children, have joint incomes greater than the $125,000 — and there are a lot of those folks out there — they’re feeling the same pain that everyone else is saying, and if you would ask them they are middle class," Sands says. "…That is middle class Iowans and we are raising taxes on them."
Bolkcom, the Democrat from Iowa City who leads the Senate Ways and Means Committee, says Iowa’s tax system has become skewed, putting a larger burden on lower income Iowans. "We’ve seen the increase of sales taxes over the last 15 or so years, going from four percent to seven percent. We’ve had an income tax cut that provided significantly more benefit to wealthy Iowans," Bolkcom says. "And over the last number of years we’ve seen really an expansion in gambling and lottery revenues, both regressive taxes paid by working people in our state."
Under the Democrats’ plan, 48 percent of Iowans would see their income tax payments to the state decline. But Republicans like Senator Randy Feenstra of Hull object to the idea of getting rid of a tax break that allows Iowans to deduct their federal income tax bill from their income before calculating their state taxes.
"Come on, let’s be reasonable, people," Feenstra says. "We need to have reason when it comes to the bills that we pass in this senate."