Senate Republicans today unveiled an tax plan that would reduce Iowans’ tax burden by 250-million in five years, but it’d also raise some taxes. The plan from Senate Republicans would raise the state sales tax half a penny and would hike the cigarette tax by 36 cents a pack. In addition, state sales taxes on your utility bills would stay in place rather than be gradually erased, as is the plan under current law. Republican Senator Larry McKibben of Marshalltown says those tax increases — which he calls “revenue enhancers” — are off-set by the income tax reduction that comes from his “flat tax” idea that would be written so 80-thousand “working class” Iowans no longer have to pay income taxes. McKibben says it’d be the largest tax reduction in Iowa history. It includes the phase-out of state taxes on Social Security and pension income. McKibben’s comprehensive tax package also includes a freeze on property taxes which he says would have Iowans 20-million dollars next year. McKibben calls the package one of the “big ideas” legislators are considering this year.Democrats were quick to criticize the plan. Senate Democrat Leader Mike Gronstal of Council Bluffs says the increases in state cigarette and sales taxes fall disproportionately on poor Iowans.Gronstal says “it’s Robin Hood in reverse” — raising taxes on poor people so taxes on rich people can be cut. Senator Joel Bolkcom (bowl’-kum), a democrat from Iowa City, says the plan calls for a tax shift in Iowa. Bolkcom says it shifts taxes from those who can afford to pay to “average working Iowans.” Bolkcom says Republicans have broken their “no new taxes” pledge by advancing the proposal.
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