Tax showdown looms as legislative session approaches

A showdown looms at the Iowa statehouse over the G-O-P plan to eliminate state income taxes on the Social Security benefits for the elderly. Democrat Governor Tom Vilsack doesn’t like it. Vilsack says he has other priorities, such as providing more money to education.Vilsack is pressing instead for a tax cut he says will spur business development. He wants to eliminate the “capital gains” tax on risky “venture capital” investments. He says tax cuts have to create economic opportunity.Republican Jamie Van Fossen of Davenport, chairman of the House Ways and Means tax-writing Committee, says eliminating the income tax on Social Security will make Iowa more competitive with low-tax states.Republican Larry McKibben of Marshalltown, chairman of the Senate’s Ways and Means Committee, says Vilsack and the G-O-P have a philosophical disagreement. He says it’s wrong to tax benefits people have put away as a benefit.Under present law, married Iowans who earn 32-thousand dollars or more in Social Security income pay state income taxes on that money. It amounts to about 45-million dollars in state income taxes. Iowans who earn less than 32-thousand do not pay income taxes on their Social Security benefits.