A proposal advancing in the Iowa Legislature would amend the state constitution to make it more difficult for lawmakers to raise income taxes. The amendment would require any income tax increase to be approved by a two-thirds majority in the House and Senate.
At a subcommittee hearing Thursday, Sen. Jim Carlin, R-Sioux City, said the amendment (SJR 22) should go before voters to give them more input on state tax policy.
“Basically what we’re doing as legislators is we’re saying to Iowans, ‘Do you think the bar should be set higher when we increase your taxes?’” Carlin said. “We’re going to let you vote on it instead of letting the politicians decide that issue.”
Carlin said Iowa’s income tax rate puts the state at an economic disadvantage with neighboring South Dakota, which is one of seven states with no income tax.
“In our part of the state we have seen so many jobs drive across the river and take all their tax revenue with them because we don’t have any competitive footing on taxes with South Dakota,” Carlin said.
Opponents at the hearing said the amendment would tie lawmakers’ hands if they tried to re-balance revenue from different tax sources in the future.
The amendment would not apply to sales taxes, property taxes or income tax decreases. Sen. Bill Dotzler, D-Waterloo, said that would incentivize the legislature to rely more on property and sales taxes which are proportionally more expensive for low-income residents and less on income taxes which are more progressive.
“If we want to put fairness back into the tax code, this piece of legislation would protect the wealthiest individuals in our state from paying their fair share,” Dotzler said.
The amendment passed out of subcommittee on a 2-1 vote and now moves on to the Senate Ways and Means Committee. It would have to pass in the legislature in two consecutive years before going to a statewide vote.