Republicans in the Iowa House have passed their plan to shrink the personal income tax to a single rate of 4% and erase the state tax on retirement income. It’s nearly identical to the plan Republican Governor Kim Reynolds unveiled in January, with the exception of her proposed reduction in the corporate income tax.
“This is a historic tax bill that will change the climate in the state of Iowa for years to come,” said Representative Lee Hein, a Republican from Monticello who is chairman of the House Ways and Means Committee.
House Democrats offered an array of alternatives, but each was rejected by Republicans, including the idea of altering the GOP’s schedule tax rate reduction schedule — to speed up tax cuts for low and middle income Iowans. Representative Charlie McConkey, a Democrat from Council Bluffs, unsuccessfully argued that the Earned Income Tax Credit should be raised.
“This tax credit rewards work, not wealth,” McConkey said.
House Minority Leader Jennifer Konfrst, a Democrat from Windsor Heights, said the GOP tax proposal helps the wealthy, “helps them first, helps them most and helps them best and that is not what we should be doing here in Iowa.”
Representative Dave Jacoby, a Democrat from Coralville, said the bill leaves out Iowans who are struggling to make ends meet. “This bill is Republican socialism and sends the middle class taxpayers’ dollars to the ultra rich,” Jacoby said, “to the millionaires.”
House Majority Leader Matt Windschitl, a Republican from Missouri Valley, pointed to the state surplus, with an expected $2 billion in a taxpayer relief fund by July.
“Iowans overpaid. That’s their money, not ours,” Windschitl said. “…This is not going to stop us from funding the priorities of Iowans. This merely means that we’re not doing that in a way where we have a bloated government bureaucracy and growing government at an unsustainable rate.”
Three Democrats joined with all the Republicans present to approve the House bill. House Speaker Pat Grassley said today’s vote shows tax relief is the number one priority for Republican legislators.
“We’ve been clear since the beginning of session we have the money to pass a tax cut without raising a tax on others,” Grassley told reporters, “and that’s what we just followed through with.”
Senate Republicans have released their own, more expansive plan that includes a corporate tax reduction along with a mechanism that could ultimately wind the state income tax down to zero.
(This story was updated at 7:34 p.m. with additional information.)