Governor Chet Culver says it’s time to "seriously look at" a major change in Iowa tax law. Last week, Democrats in the Iowa Senate said it’s time to consider removing a provision which allows Iowans to deduct their federal tax payment from their income before calculating their state income taxes.
"I think we should have a conversation on that this session," Culver said this afternoon during a telephone news conference. "There are a lot of advantages to doing that."
Just two states — Iowa and Louisiana — have this tax provision on the books and critics say it makes Iowa’s income tax rates look higher than they are when compared to the other 48 states.
"It’s kind of complicated," Culver said, with a laugh, "and anything we can do to kind of simplify and streamline the tax code I’m for it. It’s somewhat outdated in terms of the way that it’s applied and, you know, I think that it might be time to just kind of look and see if we can’t streamline it, simplify it, make it more straightforward and clear."
The group Iowans for Tax Relief has long fought to maintain this tax provision. Iowans for Tax Relief president Ed Failor, Junior spoke with Radio Iowa by phone this afternoon. "I’m not surprised that it’s confusing and complex for this governor to understand," Failor said. "He’s trying to take away the largest deduction that middle income Iowans, particular renters have. These are the folks who are treying to get ahead and he’s going to take away their largest deduction? It’s silliness. It’d be a $600 milion tax increase on Iowans in a recession….a bad, bad idea."