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'The Watchdog'

Tax Changes Ahead! Are they Good or Bad?

posted on January 12, 2018

This week Governor Reynolds and leaders in the legislature have all talked about changing Iowa’s tax code.

“The objective has always been the same – for more money to be kept by those who earned it. Tax relief is about emboldening our middle class and encouraging our citizens to invest in themselves, their local businesses, and our state.”
– Senate Majority Leader Bill Dix

“More money in Iowan’s pockets is a great thing. Federal tax cuts for Iowans could mean a higher state tax burden in future years. Those tax cuts were intended to remain with the hardworking taxpayers of Iowa. Let’s make sure that happens!”
– Speaker of the House Linda Upmeyer

“This is a watershed year for the State of Iowa. When the federal government passed their tax reform, that really put a lot of pressure on us to do something. Now it is our time to act.”
– Senate Ways & Means Chair Randy Feenstra

“I will be proposing a tax reform package that significantly reduces rates, modernizes our tax code, eliminates federal deductibility, and provides real tax relief for middle-class families, farmers, and small businesses.”
– Governor Kim Reynolds

We agree with much of the sentiment expressed. Iowa DOES need tax relief.

Because of federal tax law changes, Iowans who get a cut in federal taxes will now have an increase in their state taxes. Some have called this a “windfall” for Iowa. This is NOT a windfall. Those dollars do not get to help the state budget.

To get the dollars into taxpayers’ pockets, where they belong, the Governor proposed reducing rates and eliminating federal deductibility. ITR fully supports cutting rates and believes federal deductibility serves as a taxpayer protection but we are open to a discussion about its merits. Remember, when a protection like federal deductibility is removed, it’s never coming back.

At this time, no one has seen a detailed proposal or legislative bill. When we do, we want to support a bill that provides true tax relief for all, and doesn’t simply shift the tax burden among taxpayers. As our name says, we are Iowans for Tax RELIEF, not reform.