Republicans in the House have expressed concerns about cutting taxes in the middle of a pandemic. Senator Dan Dawson of Council Bluffs is making it clear he and other Republicans in the Senate will argue the opposite.
“Iowa does have the financial capacity to deal with these priorities,” Dawson said yesterday, “and Senate Republicans will ensure that these priorities will be part of the final discussion to close out this session.”
Provisions in the new federal pandemic relief package suggest states that cuts taxes must forfeit federal aid. Dawson predicted there will be a legal fight over that.
“We will not hold up our tax policy based upon the whims of the federal government,” Dawson said. “And if our federal government overlords wish to continue down this path of a massive constitutional overreach on the normal business of state tax policy, then it’s very likely that states will see the federal government in court.”
Republican attorneys general from 21 states yesterday threatened to take the Biden Administration to court on this point.
The bill approved by the Iowa Senate yesterday would immediately begin phasing out the state inheritance tax, too. There’s no inheritance tax for spouses or lineal descendants like children, stepchildren and grandchildren, but a series of escalating tax rates are charged to others who inherit money or property. Senator Janet Petersen, a Democrat from Des Moines, said the bill will help elderly lesbian, gay and transgender Iowans who do not have children and never married their partners.
“I believe that love is bigger than government and any other institution and that we should not, as a government, be deciding who deserves tax-free inheritance and who doesn’t,” Petersen said.
Dawson said the inheritance tax is “morbid” and Iowans shouldn’t have to weigh the state tax implications when writing their wills.