Republicans in the legislature say they intend to create a 375-dollar tax credit next year for every Iowa taxpayer.
“We want to make sure that the overpayment of taxes is returned to the taxpayer,” Senate Republican Leader Bill Dix says.
The proposal calls for taking whatever money in the state treasury that’s not spent by June 30th and returning it to taxpayers in the form of a tax credit. This idea was first proposed two weeks ago House Republicans and now Republicans in the Senate are embracing it. According to the calculations of Senator Dix, the tax credit for next year would be $375 per individual taxpayer.
“It’s a good first step in overall tax reform and reducing the tax burden on Iowans. It’s also very significant,” Dix says. “We believe it could very well return to an average Iowa family $750 of overpayment in tax and that’s real money. That’s money they could put to use right away.”
But it would not be a check in the mail. It would be a new tax credit on income tax returns and it would vary year to year, based on how much money in the state budget plan is unspent at the end of the year.
“We believe that it is the right way to restore money back to the taxpayer,” Dix says.
However, the proposal from Republicans in the legislature seems to put a snag in Republican Governor Terry Branstad’s plans to use that unspent money to finance his two top priorities.
“We are using a portion of the ending balance as a bridge for implementing both education reform and property tax reform,” Branstad spokesman Tim Albrecht said in a written statement. “Our projection clearly shows that by the full implementation of these programs, ongoing revenues will exceed ongoing expenses by somewhere in the neighborhood of $90 million annually.”
Republican leaders say they haven’t seen the details of Branstad’s proposal in bill form yet. House Speaker Kraig Paulsen, a Republican from Hiawatha, told reporters Republicans in the legislature do not plan to use unspent money at the end of the state budgeting year to pay on-going expenses.