New plan would erase income taxes for several cities

Residents in up to 100 Iowa cities along the state’s borders could vote to erase their state income taxes if a bill that cleared a House committee today (Tuesday) becomes law. Representative Chuck Soderberg , a republican from Le Mars, says it would help cities that’re losing residents to low-tax South Dakota or Illinois. “It is thinking outside the box,” Soderberg says. Representative Phil Wise, a democrat from Keokuk, backed the bill, too. “I represent Keokuk, Montrose, and Fort Madison and the competitive situation relative to those three border communities and the state of Illinois is a real issue,” Wise says. “I don’t know if this bill will work, but I am willing to take a risk and let some communities step up and find out if it does.” Representative Ray Zirkelbach, a democrat from Monticello, opposed the bill. “I have always been taught and I’ve always learned from state constitution that you should legislate for the benefit of all, and this seems to only benefit 100 cities,” Zirkelbach says. Representative Ed Fallon, a democrat from Des Moines, says the proposal may not right the wrongs of state tax policy. “I suspect that the best way to solve this is with some kind of action statewide,” Fallon says. But Representative Paul Wilderdyke, a republican from Woodbine, says if Sioux City opts to establish a city-wide state-income-tax-free zone, smaller towns around Sioux City will benefit, too, if Sioux City grows. “Iowans have to stop their way of thinking that if it doesn’t directly influence their community, it is not going to be a good bill or is not going to develop their area,” Wilderdyke says. “I think we need to start talking what is good for parts of Iowa is going to be good for all of Iowa.” Representative Clarence Hoffman, a republican from Charter Oak, says 34 percent of Iowans live in a border city. “I think this ia a bold, big move. It is something that I am very, very excited about,” Hoffman says. To establish a no-income-tax policy for city residents, there would have to be a city-wide referendum, and cities that are within five miles of a neighboring state’s border would be able to take advantage if the bill becomes law. City officials would have to raise other taxes locally, like property or sales taxes, to replace the lost state income taxes. The bill faces an uncertain future, though, as it must clear another House committee, as well as the House before its even considered in the Senate. To decide