Based on comments from policymakers at the Capitol this week, lawmakers are ready to seize the opportunity before them to give Iowans a better and brighter future.
On the opening day of the legislative session, legislative leaders give comments on the session ahead. Republican leaders in both chambers highlighted Iowa’s budget surplus and the need for tax relief.
Governor Kim Reynolds:
In her Condition of the State address, Governor Reynolds outlined a bold, conservative, and pro-growth policy agenda that places Iowa taxpayers and families first. This includes:
- A four percent flat income tax
- Eliminating state income taxes on retirement income
- Reducing the corporate income tax from 9.8 percent to 5.5 percent
- Expanding parental choice with an Educational Savings Account (ESA)
- Reforming occupational licensing regulations
- Other policy issues to get more people back to work
“When I took office, we had the sixth-highest income tax rate in the country, and… when I get this done, we’ll be the fifth-lowest,” Reynolds said. “That is significant.”
Senate Majority Leader Jack Whitver:
“Few policies have shown more long-term growth impact than significant, permanent income tax cuts. Implementing pro-growth tax policy to make Iowa one of the fastest-growing states in the country is policy that makes a generational difference.”
House Speaker Pat Grassley:
“This is something every Iowan can understand. The state is taking in more in tax money than it needs. And Iowans deserve their money back… We must return this money to the Iowa taxpayer. Decisions made by the Biden Administration have led to record-high inflation that is hurting Iowa families. Iowans need relief now.”
Senate President Jake Chapman:
“When individual economic freedoms abound, economic prosperity follows… Now is the time for action; now is the time to be bold! We cannot allow another year to go by sitting on the sidelines while other states are aggressively reducing taxes. This is the year to take action!”
House Majority Leader Matt Windschitl:
“One of the biggest things that we are going to have to face this session is the surplus… The taxpayers of Iowa know how to better spend and invest their money than state government ever does. So we need to find a way to put that money back into Iowans’ pockets; it will continue to spur our economy and move us forward.”
Opening comments from Democratic leaders were mostly focused on ways to grow government. Senate Minority Leader Zach Wahls made no mention of Iowa’s budget surplus or the need for tax reduction to fix the massive overcollection of tax dollars. House Minority Leader Jennifer Konfrst briefly touched on the issue when she said, “We should reward the hard work of Iowans with more money in their pockets and higher wages.”
This is a very exciting time for Iowa taxpayers who understand that we all deserve a break from tax rates that are simply too high. We are pleased to see leaders from both the House and Senate express a strong interest in significant, permanent income tax rate reductions.
ITR supports Governor Reynolds’ proposal, and we will be at the Capitol every day to make sure legislators hear the voice of the taxpayer. We are optimistic that by the end of this session, Iowans will see a meaningful boost to their family budgets by having government take less of their money.
Misleading Statements About the Governor’s Plan
Believe it or not, there are people out there who don’t want you to have your money back. Instead, they see the current overpayment of taxes as an opportunity to grow government. They oppose the governor’s plan because they will be left with less of your money to spend on their big government dreams. Unfortunately, some of these voices are trying to confuse and mislead about the governor’s proposal.
The way the governor’s bill is designed, not a single Iowa taxpayer will see their tax burden increase.
It is important to remember that under our new laws set to take effect in tax year 2023, the calculation of taxable income changes to conform more closely to the federal code. This results in less income being subject to Iowa tax than under current law. In fact, under next year’s tax code, many more Iowans may not be subject to any tax at all.
This actually works to highlight one of the key benefits of a flat tax: Simplicity. A complicated tax code makes tax reform more difficult as policymakers work to balance potential winners and losers. A flat, simple tax is easier to reform, as the only decision point is how much to lower the one single rate.
Here are facts: Under Governor Reynolds’ bill, no Iowan will see their tax bill increase. Once fully implemented, every single Iowan will see their tax burden decrease. For most Iowans, the savings will greatly benefit their family budget.
Legislative Bill Updates
ITR’s team at the Capitol is tracking the following bills of interest:
Home-Based Business Protections
HF 2005 – Referred to Local Government
Public Assistance Program Integrity
HSB 504 – Passed Human Resources Subcommittee
HSB 502 – Subcommittee Meeting Tuesday, January 18
HSB 503 – Assigned to Human Resources Subcommittee
HSB 507 – Assigned to Human Resources Subcommittee
HSB 508 – Assigned to Human Resources Subcommittee
HSB 515 – Assigned to Human Resources Subcommittee
HSB 521 – Subcommittee Meeting Tuesday, January 18