The chairmen of House and Senate committees that oversee tax policy are proposing what they describe as a sustainable way to gradually eliminate Iowa’s individual income tax.
The idea? Have the Iowa Public Employees Retirement System start managing the state’s more than $3 billion Taxpayer Relief Fund. The profits earned from investing that money would be used to ratchet down the state income tax rate over time.
“We’re doing something that everyday Iowans do for their retirement, everyday businesses here in the state do,” Senate Ways and Means Committee chairman Dan Dawson told reporters. “We’re using the money, growing it for something bigger.”
Bobby Kaufmann, a Republican from Wilton, is chairman of the House Ways and Means Committee. “If you look at what other states have done, not only is it one of the more innovative plans, I think it’s one of the most responsible in the entire country at getting Iowa to our long term goal of zero percent income tax,” Kaufmann said.
Dawson said the plan ensures state government can meet its spending obligations even as the state reduces income tax revenue. “Ultimately it’s a responsible glide path to zero,” Dawson said, “as opposed to some massive sales tax increase or eliminating a bunch of (income tax) exemptions out there.”
Kaufmann said now’s the time for the public to weigh in on the idea. “As this is talked about at forums, as it’s disseminated amongst the press, I think you’re going to find a high appetite for Iowans to want to do that,” Kaufmann said. “They’ll communicate that to us and we’ll get this done as soon as we can.”
Both lawmakers, though, describe the proposal as a long-term plan and expect to prepare a bill this spring that would speed up already approved income tax cuts. They’re waiting on a March report on state tax revenue and may use some elements of the tax reduction plan Governor Reynolds introduced three weeks ago. The two lawmakers also plan to advance a proposed constitutional amendment that would require a two-thirds vote in the legislature to raise any state tax.