Republicans on a Senate committee are advancing a proposed amendment to the Iowa Constitution that would make a single-rate “flat tax” the only legal kind of state income tax. The proposal cleared the Senate Ways and Means Committee with yes votes from the 11 Republicans on the panel, but none of them publicly discussed the proposal.
Senator Herman Quirmbach of Ames is one of the six Democrats on the panel who voted against it. “By flattening the income tax, which you’re principally going, what you’re doing is reducing taxation on high income earners,” Quirmbach said.
Iowa has had a graduated income tax for decades, with higher rates for Iowans earning higher incomes. Quirmbach said in a few years the state will have to raise other taxes, like the sales tax, if the state income tax is permanently flattened to one single rate. “What cuts in services are you proposing? What increases in other taxes are you proposing?” Quirmbach asked.
Senator Cindy Winckler, a Democrat from Davenport, said Colorado, Illinois, Michigan, Pennsylvania are the only states that have a flat income tax requirement in their state constitutions. “They all have quite different make up of industries and revenue streams,” Winckler said. “We can’t identify that one size certainly fits all.”
Under current law, Iowa’s individual income tax is scheduled to shrink to a flat rate of 3.0% by January of 2026. Governor Reynolds has proposed a lower rate, to take effect retroactively to January 1st of this year. The governor has also said her ultimate goal is to eliminate the state income tax by January 1st of 2027.