RELEASE: Protect Federal Deductibility And Fix The Budget

January 14, 2010 @ 12:00 AM


DES MOINES, IA-Today Iowans for Tax Relief showed continued growing support from Iowans to protect federal deductibility and support the introduction of nine budget saving solutions by state legislators.

Ed Failor, Jr., said today, "In 2009, the voices of everyday Iowans were heard loud and clear, and the Legislature showed the common sense to maintain federal deductibility in the Iowa income tax code. With each day, Iowans continue to hold their breath waiting to see if Governor Culver and Legislators will increase taxes, but we are standing here today to tell them that is not necessary."

A just released poll shows 77.2 percent of Iowans support keeping federal deductibility*. Taxpayers successfully defeated the proposal to repeal federal deductibility last year, yet it will likely be introduced again this year. The way to fix the state budget is not a six-hundred million dollar tax increase; it is through changing Iowa government.

Speaking at the press conference today was David Dickey of Dickey Transport in Packwood, IA. "Our family runs a trucking company in Packwood, with employees who have been with us for a long time.  For many, federal deductibility is their largest deduction. We all understand we must pay taxes, but paying taxes on dollars we never see is just unfair."

David Overholtzer, a Certified Public Accountant (CPA) and small business owner from Council Bluffs, IA, stated, "A repeal of federal deductibility will increase the tax burden of nearly every client of mine.  My business clients are frequently asking me for ways they can cut their tax burden and these ideas almost always involve exploring a move to another state. In a time of economic uncertainty removing the Iowa tax deduction of the federal tax burden, is unconscionable."

Failor continued, "In October when the amount of taxes collected was not keeping up with the massive spending increases Governor Culver approved, I like many other Iowans, thought it was time for the Legislature to look at ways to be more fiscally responsible. While the Governor took the simple approach of just a flat ten percent across the board cut, I thought it was time for some innovative, and unconventional ideas for reshaping Iowa government.

Therefore, we chose to suggest budget savings measures with the following criteria for each of the nine recommendations: Cumulatively reduce state spending by 10%, hold K-12 education funding harmless, hold public safety funding harmless, no mass layoffs, no property tax or any other tax increases. With our nine proposals to trim the budget by $762.8 million, we protect federal deductibility for Iowans so they are not forced to pay a tax on a tax."

These suggestions are being drafted into legislation to be considered for debate. Our lawmakers need to implement, not just talk about; increasing government efficiency, reducing redundancy, and getting government out of the way of Iowa families and businesses to grow and prosper.

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*NTU Poll: www.ntu.org

Budget Savings Bills and Bill Sponsors

Budget Savings Measure #1:
Eliminate the Iowa Values Fund and the Iowa Power Fund, consolidate within the Department of Economic Development, and gradually reduce the personal and corporate income tax rates, with eventual elimination of both.

Bill Sponsor: Rep. Tom Sands
Budget Savings: $87.5 million


Budget Savings Measure #2:
Begin to align state employee wages with private sector wages by a five percent salary reduction and not allow a pay increase this year for state employees.

Bill Sponsor:  Rep. Jason Schultz
Budget savings:  $261 million


Budget Savings Measure #3:
End taxpayer funded lobbying.

Bill Sponsor:  Rep. Steve Lukan
Budget savings:  $4 million


Budget Savings Measure #4:
Charge for state employee's health insurance.

Bill Sponsor:  Rep. Renee Schulte
Budget savings:  $24 million


Budget Savings Measure #5:
Sell Iowa prisons to the private sector.

Bill Sponsor:  Rep. Erik Helland
Budget savings:  $39 million on operations (plus one time infusion for selling the actual prison)


Budget Savings Measure #6:
Combine the Regents Universities.

Bill Sponsor:  Rep. Linda Upmeyer
Budget savings:  $62 million


Budget Savings Measure #7:
Constitutional spending limitation.

Bill Sponsor:  Rep. Chris Hagenow
Budget savings (had this been in place since 2007):  $179 million


Budget Savings Measure #8:
Consolidate state government, specifically Information Technology.

Bill Sponsor:  Rep. Nick Wagner
Budget savings:  $14 million


Budget Savings Measure #9: 
Curb illegal immigration.

Bill Sponsor:  Rep. Matt Windschitl
Budget savings: $92.3 million