The Iowa House Tuesday night approved tax cuts for Iowa seniors that eventually could amount to almost $300-million a year. The bill that was approved includes a Republican proposal that would gradually erase state taxes on pensions and Social Security income as well as a proposal from Democrats to excuse all low-income seniors from paying any state income taxes.
Representative Carmine Boal, a Republican from Ankeny, says the tax cuts would slow the exodus of older Iowans who move to lower-tax states and take their money with them. “When retirees actually do stay here, generally they have some disposable income and they’re continuing to pay property taxes,” Boal says. But some Democrats like Representative Mary Mascher of Iowa City complained Republicans were pushing through a huge tax break for seniors that could cost the state treasury anywhere from $200 to $280 million.
“Ladies and gentlemen, I was not elected to do that kind of guessing,” Mascher said. “It’s irresponsible. It’s not good government.”
Mascher tried to get the House to vote to raise the cigarette tax to make up for the lost tax revenue, but the Speaker of the House ruled Mascher’s amendment that would have raised the state tobacco tax was not relevant to the bill. Representative Lisa Heddens, a Democrat from Ames, was another “no” vote because she contends other parts of state government will see budget cuts because of the tax cuts for the elderly. “I cannot in good conscience support this bill,” Heddens said. “The safety of my constituents, their needs and Iowa’s future, in my opinion, would be placed in jeopardy.”
But Representative Scott Raecker, a Republican from Urbandale, says he supports letting seniors keep that money. “This is an important cut for Iowans. I think our seniors will benefit from this and I believe we can make this work in the budget,” Raecker said. Raecker, the chairman of the House Appropriations Committee, acknowledged, though, that the cuts would make it “more difficult” in future years to balance the budget. The tax breaks for seniors will next be considered by the Iowa Senate which is split evenly with 25 Democrats and 25 Republicans.