The Iowa Senate released two proposals to provide income tax relief for Iowans. One bill includes reforms to accelerate the current income tax cuts and a plan to generate additional revenue to be used for tax relief. Another bill is a constitutional amendment requiring a two-thirds majority vote to increase taxes by the Iowa legislature and preserve the new flat tax by making it part of the Iowa Constitution.
Republicans have been working since 2017 to conservatively budget and responsibly fund the priorities of Iowans. At the same time, we’ve been putting money into our reserves and the Taxpayer Relief Fund. The Ways and Means committee is proposing two new funds: the Iowa Taxpayer Relief Trust and the Income Tax Elimination Fund. The trust would receive $2.6 billion from the relief fund. That money would be invested and start accruing investment income. The interest would be deposited into the Income Tax Elimination Fund. Once the elimination fund meets a series of requirements, tax rates are reduced the following tax year and the money is used to stabilize the budget. This process continues until the income tax is eliminated in Iowa.
The opportunity to use the funds from the Tax Relief Fund to provide Iowans with more security, stability, and prosperity is an opportunity we may never have again. It is why the second part of the tax reform package is just as important. The constitutional amendment requires two-thirds support among legislators to raise taxes, because taking more of Iowans’ hard-earned money should require a broad consensus, not the narrowest of majorities. Additionally, by putting a flat tax into the constitution, we can ensure the only thing that changes in the future is the tax rate, not creating complicated tax laws and taxing brackets.
Republicans work every day to make Iowa a better place for our friends, neighbors, children, and grandchildren. This new income tax structure will benefit families and small businesses all across the state. It will also protect the hard work we have done to provide tax relief for Iowa families and give them the confidence to plan for their futures.
