Republicans in the Iowa House are touting legislation that would offer another option for calculating Iowa income taxes. It’s not a simple “flat tax,” however. Representative Chip Baltimore, a Republican from Boone, says there would be just a couple of deductions under this alternative system.
“Subtract out any interest that would be earned from federal securities and take your standard deductions which would be $6,235 for a single and $12,470 for a married couple and then 4.5 percent of that final figure would be the state tax owed,” Baltimore says.
Iowans would be given the option of calculating their income taxes under the current system with its wide variety of tax credits and deductions, or choosing the simpler system Baltimore outlined.
“A simpler, more straightforward tax system that’s going to be a lot easier to prepare and calculate and easier to be predicted and planned around,” Baltimore says. “We think it’s a good opportunity for Iowans to simplify their tax preparation and probably save some money in many cases.”
A financial analysis of the proposal is not yet available. A three-member panel of House members has given initial approval to the two-option income tax system. The proposal faces long odds, however, as Democrats in the Senate have been pressing for targeted income tax cuts, aimed at low income Iowans.
Plus, Republican Governor Terry Branstad has made cutting property taxes his number one priority.