According to a new report, “middle class” and poor Iowans pay far more of their income in state and local taxes than wealthy Iowans do.
The report from the Institute on Taxation and Economic Policy shows Iowa households with an annual income of less than $20,000 pay about 11 percent of their income in state and local taxes, while the wealthiest one percent of Iowans pay about six percent of their income in taxes to their state and local governments. Charlie Bruner, executive director of the Iowa Child and Family Policy Center, is a former state legislator.
“The lowest 20 percent of Iowa households effectively pay taxes at almost twice the rate of the highest one percent,” Bruner says. “And that’s because they pay a very significant share of their income in sales tax and property taxes.”
Bruner says when you look at who’s paying how much, it shows the state’s tax system is unfair and regressive.
“We hope that this report and, frankly, out state financial condition will lead state lawmakers to look at the revenue side of the state budget and to look at the fairness and adequacy of our tax system and to take a serious look at the state income tax,” Bruner says.
Democrats in the Iowa legislature considered sweeping changes in Iowa’s income tax system last spring, but the plan was tabled. Bruner says he hopes this report sparks a statewide debate about Iowa’s tax system and its fairness, in hopes of making significant changes in 2010.