Pat Grassley

Key legislators say it will be impossible to simplify and cut state income taxes without first changing the state’s current system for awarding tax credits.

“What’s so frustrating about this is every tax credit is so different,” Representative Pat Grassley, a Republican from New Hartford, said today.

Companies that conduct major research get checks from the state because of a “refundable” tax credit. A credit for renovating historical properties can be claimed on income tax forms for over five years. Some state tax credits are limited and handed out on a first-come, first-served basis. The state is awarding more than $420 million worth of tax credits this year.

“We do need to pare back the tax credits if your really-long-term goal is tax reform,” Grassley said, “whatever that may look like.”

Representative Chris Hall of Sioux City, the top-ranking Democrat on the House Appropriations Committee, said state tax credits are growing “exponentially” and it’s time to act.

“We need to make sure that this conversation is linked directly to improving and making the state’s budget more sustainable, balanced, transparent and predictable,” Hall said.

Hall said he and other Democrats are all for tax reform, too, but the goal has to be reducing taxes for working-class Iowans, not coming up with a way to provide more tax cuts for corporations and the rich.