Governor Culver and his fellow Democrats in the legislature have settled on a plan that would cut state income taxes by $54 million.
"We’re giving back $54 million to the taxpayers, so this is going to be a major tax cut," Culver says. "I would think that Republicans and Democrats would support a tax cut of that size."
About 825,000 Iowa households would see a reduction in their state income taxes. That’s about 60 percent of taxpayers according to Senator Joe Bolkcom, a Democrat from Iowa City, who has been part of the team working on this deal.
"We think we’ve got a much better plan. We’re increasing the standard deduction that all filers will get by more than $1000. We’re creating a new Iowa College Student Refundable Credit at this time when students are seeing rising tuitions," Bolkcom says. "Those two things are probably the biggest changes that create essentially more tax cuts for more Iowans."
Nearly one million Iowan households — about 75 percent of taxpayers — will either get a tax cut or see no increase in their income taxes. About 26 percent of Iowa households would see an increase in their income taxes under the plan. Bolkcom contends those upper income Iowans have seen their taxes go down over the past decade while lower and middle-class taxpayers have shouldered more of the burden.
"I think (legislators) have just decided that putting more money in the hands of working Iowans was the answer," Bolkcom says.
Iowans for Tax Relief president Ed Failor, Junior, is critical of the proposal.
"It’s nothing more than a redistribution of wealth," Failor says.
Failor’s group adamantly opposes a key provision in the bill which eliminates a tax deduction which allows Iowans to deduct their federal tax bill from their income before they calculate their state income taxes.
The Iowa House is expected to start debate on the plan next week.
