Two top labor leaders say the state’s tax system is out of whack and it’s time for change. 

“I do think we need to look at the whole system,” says Janice Laue, secretary/treasurer of the Iowa Federation of Labor, AFL-CIO. 

 “Iowa is a state that has regressive taxes on the whole…The sales tax is the most regressive tax. The income tax is more progressive, but even with the sales tax, the income tax and the property tax — the poor people in this state — the lower income people in this state — pay more as a percentage of their income in taxes than do the well-off.”

Danny Homan, president of AFSCME Iowa Council 61 — the union that represents the largest share of state workers, says state workers have made sacrifices — recently accepting wage and benefit cuts in order to avoid layoffs. Homan says now it’s time to reassess the state’s tax system and, for starters, do away with some of the tax exemptions.

“Ostriches, for example, they don’t pay any sales taxes on ostriches. Somebody that goes out and buys an airplane, they don’t pay sales tax on an airplane, nor do they pay taxes on the parts to repair that airplane. If someone in this state can afford to buy an airplane, they ought to be able to afford to pay sales taxes on that thing,” Homan says.  “…Wine — wine shipped into this state does not suffer any sales tax.  Rare and precious.  I’m sorry, if you’re trading in rare and precious coins, maybe you can afford to pay sales tax on that.”

Laue says a 10 percent, across-the-board cut in Iowa income taxes that was enacted over a decade ago exacerbated the problem.

“Obviously, those who paid the most got the biggest break. We used to joke and say that ‘They got a downpayment on a Lincoln Town Car while the worker got a Happy Meal’ and that was the extent of that tax cut,” Laue says.  “Now, when it’s time to tighten our belts and we’re putting all the burden on the (state) employees to carry us through this hard time, we should go back and ask the citizens of this state if these services are important to them — which I believe they are — that everyone share in the burden, and it wouldn’t amount to that much money.” 

Homan says it’s time to stop “knocking on the door” of state workers and put everything on the table to fix the state budget — including tax increases.

“I want to ask all of you:  how was your drive on Wednesday and Thursday of this week?  I happened to be fortunate.  I was in Washington, D.C. I missed this snow storm, but I hear it was a pretty bad one.  Who was out there plowing those roads?” Homan asks.  “Public workers, state employees, out there plowing the roads so people could drive.”

Laue and Homan both hope legislators consider significant tax changes in 2010.  The two also hope lawmakers pass at least one of four bills the labor movement has sought, but which failed to pass the Democratically-led legislature in 2009.  One bill passed in 2008, but Governor Culver, a Democrat, vetoed it. Homan paused Friday afternoon when asked what kind of relationship unions have with Governor Culver.

“We work with the governor and his staff every day. Our relationship is what it is,” Homan said.  “I mean, at times it’s difficult.  At times it’s cooperative. I think it’s a relationship that will be improved, hopefully — can be improved, hopefully.”

Laue and Homan made their comments on Iowa Public Television’s “Iowa Press” program which airs tonight at 7:30 and is rebroadcast on Sunday morning at 11:30.