January 28, 2022 - 11:33 am - Posted in News

 

Statewide Iowa — House Republicans have released a tax plan that uses the governor’s outline for lowering the state income tax to a single rate of four percent and making retirement income tax exempt.

That’s House Speaker Pat Grassley. He expects the plan to be debated in the House soon, but he’s not setting a date.

The House GOP plan does not include a cut in the corporate tax rate as Governor Reynolds and Republicans in the Senate have proposed. Grassley says changing state tax policy toward corporations including a review of tax breaks may be a separate conversation later.

The state’s Taxpayer Relief Fund has more than a billion dollars today and is expected to top two billion by this summer, as state tax collections soar past expectations. The governor’s tax plan keeps all that money in reserve. Grassley says the House GOP plan withdraws half of it to support their tax cuts and leaves the other half in the account.

Senate Republicans aim to reduce the state income tax rate to three-point-six percent by 2027 and their bill includes a mechanism that ultimately could wind the rate down to zero. Grassley says after analyzing financial date over and over, the House GOP is comfortable following the governor’s lead.

Democrats say a flat tax will wind up causing some Iowans to pay more, while dramatically reducing the amount of income tax the wealthiest Iowans pay. House Democratic Leader Jennifer Konfrst says a flat tax is not a fair tax.

Senate Democratic Leader Zach Wahls says Democrats are waiting for an in depth financial analysis of the plan.

Democrats in the legislature have indicated they intend to release their own tax proposal. Republicans hold 92 of the 150 seats in the legislature, giving the GOP super majorities in both the House and Senate.

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