Key lawmakers say the Republican-led legislature is focused on cutting personal income taxes and the corporate income tax cut Governor Kim Reynolds has proposed isn’t part of their plans at this point.
Senator Dan Dawson, a Republican from Council Bluffs, is chairman of the Senate Ways and Means Committee where tax policy debates start.
“One thing that my members tell me time and time again and we are trying to craft a bill in that way is that there will be no corporate rate reduction without corporate credit as well as sales tax exemption modifications,” Dawson told Radio Iowa. “There’s just no interest in touching the corporate rate without touching exemptions and credits.”
Some of the current credits are so lucrative some corporations get a tax refund check from the state. House Speaker Pat Grassley said corporate tax credits and sales tax exemptions have to be reduced or eliminated if the corporate income tax rate is to be reduced.
“If we’re going to go down the path of making changes to the corporate tax rate, that should be part of the conversation,” Grassley told reporters during a news conference late las week.
Senator Dawson said the governor’s other tax proposal, to have just one rate of 4% for personal income taxes, is the focus.
“From a Senate Republican standpoint, the goals that she laid out in her bill aren’t so different from our goals as well,” Dawson said. “The first step to getting to a zero income tax is to get to a flat tax.”
The governor’s proposal retains current credits and deductions for individuals and couples filing personal income taxes. Reynolds is calling for a study about which tax breaks to get rid of and which ones to keep. Dawson said of some credits could also be called tax shelters for upper income Iowans.
“If someone wants to donate money to build a new building in downtown Des Moines and they want their name on the building, then taxpayers shouldn’t have to incentivize that,” Dawson told Radio Iowa.
Dawson said Republicans do not intend to do away with the standard deduction, credits for the parents of minor children or the minimum income threshold for filing, all of which ensure the poorest Iowans don’t pay income taxes.