Chris Hagenow of Iowans for Tax Relief discussed two big ideas at Thursday’s annual public budget hearing with Gov. Kim Reynolds. Hagenow called for “generational” tax relief as well as truth in taxation efforts on property taxes.
Hagenow thanked Gov. Reynolds for her leadership on tax policy last year as the state eliminated the inheritance tax and also removed the triggers from the 2018 tax bill. Those actions have presented a “great opportunity and platform” moving forward, Hagenow said.
“We feel that there’s a tremendous opportunity for the state of Iowa and for the legislature to seek additional income tax rate reductions next year,” Hagenow said. “As you all know, we have a $2 billion — after the end of this fiscal year — balance in the Taxpayer Relief Fund, and another roughly billion dollar difference between state revenues and the current state of the state budget. And we think that it’s time to enact a generational income tax relief bill that frankly could dwarf those that have come before it.”
Hagenow said this action needs to be “ongoing, structural, permanent” income tax rate reductions.
“We don’t feel that one-time stimulus money out of the Taxpayer Relief Fund, one-time credits that would serve the purpose that would flow into Iowans’ pockets and then it would be done,” he added. “We need to use the Taxpayer Relief Fund for permanent rate reductions.”
There is no “specific ask” regarding a number or a period of time to phase it in, Hagenow said, but Iowans for Tax Relief has a “great deal of confidence” in Reynolds and the legislature to determine the exact parameters.
In addition, Hagenow said the organization is hopeful the state takes a look at property taxes.
“Specifically through a truth in taxation, direct notification system to give Iowans the tools to understand when their property taxes are going to be increased,” Hagenow said. “The bulk of the work that can be done to limit the growth in property taxes happens at the local level with local elected officials. But inside that truth in taxation system would be an opportunity for levy rates to automatically adjust downward when assessments go up.
“And that’s the biggest frustration that Iowans have is they get an assessment increase of sometimes double digits and local governments will move forward to spend that additional property tax revenue. So let’s lower those levy rates to match the corresponding increase in assessments and true-up that amount. If local governments do, in fact, have a need — perceived or otherwise — to raise property taxes, they can go ahead and bring that up with their own local voters.”
Hagenow called it a “modest request.”
Reynolds said she appreciates Hagenow and Iowans for Tax Relief.
“Iowa is in a really strong position and that’s after record investments and foundational priorities and tax cuts,” she said. “We’ve had a significant, healthy balance that we’ve over-collected and it’s time to turn that money back to the taxpayers. We’re not competitive. We’re not near where we need to be. I’m looking forward to working with you in the legislature and really passing generational tax relief, which I believe we have the capacity and we absolutely should be moving in that direction.”
