The 11-week shut down of the 2020 Iowa legislative session due to the pandemic delayed a debate about tax policy that’s likely to be front-and-center of the 2021 session.
“I’ve said this many times, but as long as I’m the leader of the Senate and as long as we’re in the majority, we’re always going to continue to work on tax relief,” Senate Majority Leader Jack Whitver, a Republican from Ankeny, said during an interview with Radio Iowa.
Whitver said Senate Republicans want to pursue an “aggressive” reduction in taxes.
“What that looks like and what the details are is still to be determined,” Whitver said. “We have really taken some big steps over the last four years to improve our tax climate. We’re not where we need to be yet.”
The ultimate goal for some Republicans would be the elimination of the state income tax. Whitver suggested this year’s target is reducing the tax rate.
“Reducing the individual income tax is really important because it not only affects every single person in the state of Iowa, it also affects most of the businesses in the state of Iowa because most of the businesses don’t pay a corporate tax,” Whitver said. “They pay the individual income tax and so when you’re talking about pro-growth, pro-job policies, individual income tax is at the top of the list.”
Last February, Republican Governor Kim Reynolds proposed a 10% reduction in income taxes, along with a 1% increase in the state sales tax to find more money for water quality projects and mental health services. Whitver said a sales tax hike has been and will continue to be a hard sell.
House Speaker Pat Grassley of New Hartford said the Republican-led legislature passed the largest tax reduction package in state history in 2018, so it’s critical to craft a state spending plan with enough in reserve to trigger the next round of cuts outlined in that 2018 law.
“From my perspective that is the number one priority when it comes to tax policy. I’m sure there are other pieces that come up. We’ve had some child tax policy that we’ve been working on,” Grassley said during an interview with Radio Iowa.
Grassley said legislators also are waiting to see whether Governor Reynolds proposes the same “Invest in Iowa” package she did last February or if she makes major adjustments.
“We have to be careful to rush to judgement on anything we’ve seen in the past until we’ve seen what the new proposal may look like,” Grassley said. “We have 14 new members that haven’t even seen the old proposal, let alone if there’s something new.”
Democrats say they’ll push for specific legislation to help Iowans get through the pandemic.
“We want to make sure we’re focused on long-term recovery efforts to get the economy rolling again. We want to make sure we’re using aggressive plans to help families, businesses, schools and health care workers recover over the next several years,” said Representative Jennifer Konfrst, a Democrat from Windsor Heights who is the assistant House Minority Leader. “We don’t feel like it’s one or the other. We feel like Covid recovery works toward building Iowa’s economy and building a better life for Iowans.”
The 2021 legislative session begins next Monday, January 11.