Iowa Senate Republicans are proposing a tax overhaul plan that it says would provide $1 billion a year in individual and corporate tax relief.
It proposes lowering the top individual tax rate from 8.98 percent to 6.3 percent beginning in 2019.
“Working families in Iowa deserve big, bold tax relief,” said Sen. Randy Feenstra (R-Hull).
The proposal, called the Iowa Working Families Tax Relief Act, also lowers the state’s corporate tax rate, which is currently 12 percent.
The proposal also reduces or eliminates some of the state’s tax credits, and phases out Iowans’ ability to deduct federal taxes on their state tax returns.
Senate Democrats say they’re skeptical the plan will be good for Iowa.
“With a $1 billion price tag every year, I’m extremely skeptical that the state can afford this plan without making the state’s budget crisis even worse,” said a statement from Rep. Dave Jacoby (D-Coralville), ranking member of the House Ways and Means Committee.
Jacoby’s statement says Democrats want three criteria met before any tax cut plan is approved: balance the state budget, be fair and simple for all Iowans, and provide relief for the middle class.
Last week, Gov. Kim Reynolds unveiled her own tax overhaul plan. It calls for reducing the top individual tax rate to 6.9 percent over several years, and also phases out deductions for federal taxes paid when completing the state tax return.
Iowa Democrats have cautioned Republicans against cutting taxes too deeply, citing budget problems in Kansas that followed tax cuts. Iowa Republicans have said Kansas legislators didn’t manage state spending well enough to account for the reduced tax revenue.
