Week three of the 2022 legislative session was very busy for me. There were plenty of subcommittees which gave us a first look at many ideas.
As chair of an appropriations subcommittee, I help oversee the budgets of 14 departments and some smaller agencies and boards. I spent the beginning of the week in back-to-back meetings with department heads. The governor had already given us her take on how much each budget should get, so I am striving to justify each increase so the taxpayer’s money is used most effectively. The only increases across these 14 departments goes to the inspection of nursing homes and increased utilities cost for government buildings. Nursing home inspections fell far behind during Covid, and this extra funding should help get inspections caught up. The governor has set a lean budget hoping to implement a decrease in taxes.
The biggest issue for the Senate this week was the release of the Senate Republicans tax relief package. Our goal was to look carefully at the governor’s proposals and see if they will work long term or if we can justify even more cuts. Looking at personal income tax, currently the top rate is 8.53 percent and this applies to earnings over $78,000. Many other states don’t trigger their top rate until much higher income is hit, many over $100,000. That means that many middle-income Iowans pay some of the highest state income tax in the country. Our tax bill will be phased in over a number of years with a goal of achieving one rate for everyone at 3.6 percent. That will place us at the 4th lowest rate in the country when are now we are at the 8th highest rate.
Some have suggested that a flat tax hits the poor the hardest. When you consider that the standard deduction allows a family to make $22,000 before any tax is paid, that is not so. Iowa’s corporate tax rate is also currently one of the highest in the country. In order to compete with other states, we have offered many tax credits and exemptions to entice a company to come to Iowa. This means other companies must pay more. We are working to reduce the tax rate for all businesses by diminishing special treatment for some.
We also propose eliminating taxes on retirement income and expanding the military pay exemption to full-time National Guard members. Farmers will be exempted from taxes on cash rent or crop share when they retire. Our desire is to keep more of our retirees in Iowa, rather than seeing them flee to other states (such as Illinois) that don’t tax pension income.
As I make decisions over the use of taxpayer money, I am reminded of a famous quote of Benjamin Franklin’s, “A penny saved is a penny earned.” As always, it is a pleasure and an honor to serve you. Please do not hesitate to call my cell or visit me at the Capitol about any issues or concerns.