Democratic gubernatorial candidate Jack Hatch is proposing a tax package he says will lower state income taxes for “close to 90 percent” of Iowans.

“The very wealthy are going to be paying higher and the middle class are going to get a bigger break,” Hatch said during a statehouse news conference this afternoon. “That’s what I think this state needs.”

Hatch would increase the tax credit parents get for a child from $40 to $500. He’d more than double the amount of money Iowans can earn before their income is even subject to taxes and, for married couples, Hatch would exempt the first $1000 the second wage earner makes from state income taxes.

“We want to reward parents who in the past have worked harder, longer, but for less and need a break,” Hatch told reporters.  “…I think we have to recognize that the dual income families are parents with children who are working the longest and the hardest and for less over the years and that’s who should get the break.”

The final piece of Hatch’s tax plan is a proposal that has floated around the statehouse for years, but has faced strong opposition from a key constituency in the Republican Party. Hatch proposes an end to the state tax break that allows Iowa taxpayers to deduct what they paid in federal taxes from their income before calculating how much they owe the state.  Hatch pointed to an analysis which indicates an Iowa household with an income of $80,000-$90,000 would see a state income tax reduction of about a thousand dollars under his plan.

“This is the most important proposal we’ll be making for the future of this state,” Hatch said.

Hatch would use about $300 million from the state’s surplus to cover some of the reduced state income tax revenue from his plan. Republican Governor Terry Branstad has already dedicated part of that surplus to repaying cities and counties for lost property tax revenue that will come about from the commercial property tax cuts Branstad and legislators agreed upon this past spring. Hatch voted against that plan.

“I believe that middle class families need a break more than I believe large corporate interests need a break,” Hatch said today.

Hatch is a state senator from Des Moines. One other candidate — State Representative Tyler Olson of Cedar Rapids — has announced he’s seeking the Democratic Party’s 2014 gubernatorial nomination.

AUDIO of Hatch’s 12-minute news conference