State Sen. Jake Chapman (R-Dallas) is entering his first session as chair of the Ways and Means committee in the Iowa Senate. He has a big goal in mind as he fills that role.
“What I want to do, my focus is, total elimination of income tax in the state of Iowa,” he said. “How do we get the ball moving to get that done? That has been my focus and it will continue to be my focus until we eliminate income taxes in this state.”
Chapman said most areas that have seen job growth with great jobs are in states with little or no income tax.
“In northwest Iowa, what’s happening up there is they’re moving to South Dakota,” Chapman said. “And they’re doing it for a reason and it’s not for the sand dunes or whatever else they have in South Dakota. It’s because of no income tax.”
Iowa is one of the worst states in terms of property tax and, while improving in income tax rates, it’s still toward the bottom of that list as well.
“And we’re not very good on sales tax and there are conversations about raising the sales tax,” Chapman said.
“That is a losing proposition and one that I’m not interested in going down.”
Chapman said any bill that is a tax increase is a non-starter for his Ways and Means committee in the Senate.
“I’m not going to run a bill that increases a tax on Iowans,” he said. “If we’re going to have conversations about eliminating the income tax in Iowa and in the process raising the sales tax to accomplish that goal, I’m interested in having those conversations. But as it sits, I’m not going to raise the sales tax and put Iowa in a noncompetitive situation where you’re the state with one of the highest income tax, highest property tax and now one of the highest sales tax. That is not a winning message and it is not a road we’re going to go down.”
The sales tax increase being discussed centers around IWILL and a trust fund for conservation, recreation and water quality in Iowa. Voters passed an amendment in 2010 that approved the 3/8 of a penny sales tax the next time the sales tax is hiked in Iowa.
Some legislators have expressed hope in a net-neutral way of implementing that sales tax increase. Chapman is not one of them.
“I’m also not interested in revenue-neutral, shifting costs from one pocket to the other,” he said. “What I’m interested in is putting more money in the pockets of Iowans and allowing them to keep more of their money. I do think a sales tax is a fair tax, more fair than an income tax. But I’m not, as chairman, I am not going to just shift tax burdens. We’re going to do tax cuts. That’s what we’re going to do and that’s my focus and I’m optimistic that we will. We can build on what we’ve accomplished thus far and move towards a complete elimination of the income tax.”
Eliminating the income tax might not happen in 2020, but the process can certainly start.
“It’s a huge step, but it can be done,” Chapman said. “It absolutely can be done. It’s just a matter of, is there a willingness to take on those bold initiatives? We hear over and over again that we don’t have oceans, we don’t have tourism. Yeah, you’re right, but it’s a matter of priorities. Do you want it to be a priority? Do you want to eliminate income tax in this state? If there is a will, there’s a way to get it done.”
With a budget surplus, Chapman said he hears legislators, mostly from the other side of the political aisle, asking how the legislature is going to spend the money.
“For me, as chairman of Ways and Means, it’s how are we going to give it back,” he said. “That is an over-collection of taxpayer dollars and we’re going to give it back to the taxpayer through additional tax cuts. That is one of my big focuses — how can we become a competitive state not only in the Midwest, but across the entire country?
“We live in a global economy now where we have to be competitive. We’ve been stagnant in this state for far too long. We’ve got good paying jobs that are not being filled. We have a very low unemployment rate. How do we attract and retain people in this state? The answer really is quality of life. One of the big components of quality of life is how much money am I going to have in my pocket at the end of the day.”
There is a reason Chapman is anxious to get started on addressing these economic issues.
“Every year we wait to move towards that is a year we lose competitive advantage,” he said. “We could have the same thing here in this state with bordering states, where there are individuals moving to Iowa because of our tax climate. But right now, when you have very high property taxes, high corporate tax rates and high income tax, that’s tough.”
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