Cuts and More Cuts
Yesterday afternoon, it was announced that Iowa House and Senate leaders had agreed on legislation to speed up the lowering of Iowa’s individual income tax rates.
The top rate this year is 5.7 percent, and is scheduled to drop to 4.82 percent next year.
But the Governor called for dropping the rate lower, faster, given how flush with taxpayer cash the state treasury is.
The deal would take Iowa to a 3.8 percent flat income tax rate by next year, 2025. It was scheduled to drop to 3.9 percent in 2026, so this gets us to below the ultimate goal a year sooner…with a nearly 2 percent drop from this year to next alone.
Officials say the compromise reached this week will return a billion extra dollars back to Iowans. A vote on this could come before the weekend.
The governor had hoped things would be cut this year retroactively to 3.65 percent, then down to 3.5 percent next year…the legislative leaders are more conservative than that, but the governor’s office indicated she was “on board” with the move.
Some House and Senate Republicans would like to eliminate the individual income tax altogether…but prudent to go a bit slower and make sure they don’t have to reverse course, as was famously done in Kansas.
The bottom line is that the state is operating with big surpluses, and lawmakers therefore have two choices: more government spending to whittle that surplus down, or reduce taxes and stop collecting so much that is not needed. I’m firmly in the “stop collecting so much” camp, and this approach of making sure the funds are in place has served us well.
I’m looking forward to contributing less to the state treasury going forward…any time they’re willing to put it in place.
