spot_img

Op-Ed: Iowa taxpayers win big at the end of 2024’s session

Date:

spot_img

The last several elections demonstrate that Iowans support the tax relief efforts of Gov. Kim Reynolds and those legislators who have voted to cut taxes.

Iowa’s legislature continued the tax cut momentum late last week, by passing the fourth round of income tax reforms in recent years. This new legislation will push Iowa’s personal income tax down to a single, flat rate of 3.8 percent in 2025, delivering more than $1 billion of tax relief over the next six years. Further, the legislature passed two important taxpayer protections, which include a two-thirds majority requirement of both houses of the legislature to approve an income tax increase and an amendment protecting the flat tax, which would prohibit a future legislature from reinstating a progressive income tax system.

Prior to the start of this year’s legislative session, ITR Foundation released “Accelerate, Lower, and Eliminate: A Pro-Growth Blueprint to Make Iowa’s Tax Code More Competitive,” which outlined a potential pathway to not only lower the flat tax, but also place the income tax on a path toward elimination. Going into the session, income tax reform was a priority for both Gov. Reynolds and legislative leaders, as it has been since 2018, when Iowa had some of the highest tax rates in the nation. At that point in time, our top individual rate was close to nine percent and Iowa had the highest corporate income tax rate in the nation at 12 percent. In 2022, Iowa led the nation in the state “flat tax revolution” by gradually phasing out the progressive income tax with a flat tax of 3.9 percent that was scheduled to be implemented in 2026 – all before this latest tax cut that delivered a lower rate to Iowans even sooner.

A top reason for wanting to pass additional income tax reform was the fact that Iowa still is over collecting from its taxpayers. Due to fiscal conservatism, Iowa ended Fiscal Year 2023 with a $1.83 billion surplus and our state’s reserve accounts are filled at their statutory maximums (over $900 million). Repeated surpluses have also fueled an enormous growth in the Taxpayer Relief Fund. The Taxpayer Relief Fund has a current balance of $3.6 billion and this is projected to increase.

As the 2024 legislative session drew to a close, the legislature also advanced two important constitutional amendments that would serve as taxpayer protections. The first would require a two-thirds majority vote of the legislature to increase income taxes and the second would prohibit the establishment of a progressive tax system, meaning that a single-flat tax rate would be protected. Both amendments would serve as important taxpayer protections and force the legislature to restrain spending.

“Constitutional amendments to require a flat tax and a supermajority to raise taxes give Iowans the confidence to know state government will stay within its means, and taxes will remain low, fair, and structured to promote growth,” stated Senate Majority Leader Jack Whitver.

Overwhelmingly, Iowans support additional tax relief and making it harder for the legislature to increase taxes. The Iowans for Tax Relief Foundation poll conducted during the session demonstrated that nearly 68 percent of Iowans support a two-thirds majority requirement to increase taxes, while The Des Moines Register poll found that 62 percent favor gradually eliminating the income tax. Beyond those two data points, the last several elections demonstrate that Iowans support the tax relief efforts of Gov. Reynolds and those legislators who have voted to cut taxes.

The legislature will need to pass both proposed resolutions again during the next legislative session in order for them to appear on the ballot. Iowans would then have the opportunity to decide whether or not these taxpayer protections should be added to the Constitution.

The acceleration to a flat 3.8 percent flat tax rate in 2025 and the advancement of the proposed constitutional amendments are two important taxpayer victories. The door is still far from closed on additional tax reforms and looking to the future, policymakers should seek out opportunities to not only further lower the flat tax rate, but eventually place the income tax on a path toward elimination altogether.

Read the Black Chronicle Black History Edition for Free! Click Below

Read the Black Chronicle Black History Edition for Free! Click Below

spot_img
spot_img

Subscribe

Share post:

Popular

More like this
Related

Survey: More young adults in Washington smoke weed on a daily basis

(The Center Square) – Members of the Washington State...

Law signed allowing Memphis to send more hotel tax to FedExForum renovations

(The Center Square) – Memphis and Shelby County can...

On RV tour, Shapiro talks up America’s 250th celebration

(The Center Square) — On the heels of a...

North Carolina congressman on indefinite leave for surgery

(The Center Square) – Surgery for a base of...