Democrats in the Iowa Senate today unveiled a plan that would cut state income taxes for Iowans who earn less than 60-thousand dollars by 10 percent. The plan would also exempt all Social Security income from state taxes. But the Democrats’ proposal would raise taxes on wealthy Iowans.
For example, those who earn more than 250-thousand dollars a year would see a 38 percent increase in their state income taxes. Senator Joe Bolkcom, a Democrat from Iowa City, is co-chair of the Senate Ways and Means tax-writing Committee. “This is a progressive proposal we think provides…benefits to 90 percent of Iowa taxpayers,” Bolkcom says.
Senate Co-Leader Mike Gronstal, a Democrat from Council Bluffs, says middle-class Iowans deserve a tax break. “Fifty percent of income earners in Iowa pay 62 percent of the taxes,” Gronstal says. “This proposal will in essence abolish the middle class tax penalty.” Republican legislative leaders, though, say the Senate Democrats’ tax plan will not get the G-O-P’s support.
The Republican-led Iowa House has passed a bill that would gradually erase pension and Social Security taxes, as well as eliminating all state income taxes on low-income Iowa seniors. Gronstal says that’s not going to fly with Democrats. “To talk about a 300-million dollar tax cut we believe is irresponsible,” Gronstal says. Gronstal says it’s a tax break targeted on one age group — senior citizens — while the Democrats’ plan benefits Iowans of all ages.