Democrats call GOP Tax Cut Bill “Catastrophic”

Feb 22, 2018

Republicans in the Iowa Senate Thursday put a tax cut bill on the fast track which would cost the state treasury a billion dollars a year.   Business groups are generally excited about making Iowa’s tax climate more competitive.   Democrats question how the state can afford the tax cuts without catastrophic effects on public services including education. 

Sen. Randy Feenstra (R-Hull) has been dreaming about this tax cut bill for a long time.

“For 10 years I’ve been in the senate, and 10 years ago I ran and came down here for this reason,” Feenstra said, opening up a public hearing on  the bill. 

This is long overdue. -Americans for Prosperity Iowa Dir. Drew Klein

Democrats are still waiting for details, but Feenstra says the bill will cut taxes by a billion dollars a year.   Individual income tax rates will fall by 30 percent, for an average cut of $1000.    The top corporate rate will go down,  to “make Iowa a business-friendly state” and “grow the Iowa economy".

The Iowa Chamber Alliance is still working its way through the bill:  

“But overall at this point in time I have every confidence in saying there's a lot for  us to like in this bill,” said Executive Director John Stineman.  

Steinman says the plan is fair to small businesses and corporations, and it will simplify taxes for everyone.      

Meanwhile, the  Koch-Brothers funded Americans for Prosperity is completely on board.

"This is long overdue,” said AFP Iowa Director Drew Klein.  “We have been too far behind the rest of the country for too long.” 

But educators and organized labor spoke out against the bill.  And Democrats wonder how the state will pay for it.

“We appreciate your work but we have a lot more questions than answers right now,” said Sen. Pam 

We have a lot more questions than answers right now. -Sen. Pam Jochum

Jochum (D-Dubuque.)  “What is the impact on the Fiscal Year 19 budget? What is the impact over  the  next five years.”

“We have not balanced last year’s budget,” added Sen. Matt McCoy (D-Des Moines.)  “We have not balanced next year’s budget and we have not balanced the budget year we’re in.”  

McCoy outlined all the public services that have already had their budgets cut in recent years, without taking a billion dollars out of the pie.  

Sen. Matt McCoy (D-Des Moines)
Credit John Pemble/IPR

“And if public education, public safety and health care are the losers in this I’m going to have a problem with this proposal,” McCoy said.

In order to pay for the income tax cuts, some tax credits will be eliminated, including credits that volunteer firefighters and EMT’s receive as compensation for their work.

“The people who get this tax cut are the ones who have to roll out of bed when someone is having a heart attack or stroke,” said spokesman Mike Triplett.  “The people down the street who are also getting the tax cut don't.”

Solar and and geothermal energy, ethanol, historical preservation and beginning farmers would also see  their tax credits cut. The bill raises taxes on credit unions, while cutting taxes for banks.  

It's been a passion of mine. -Sen. Randy Feenstra

Senator Feenstra said low and middle-income Iowans will see the greatest benefit. Democrats said the numbers so far don’t bear that out.    

And critics said the bill is moving too fast.  

Senator Feenstra defended the pace.

“I guess as I look at it, I’ve been working on this 10 years and I’m pretty excited to move it,” Feenstra said with a laugh.  “It’s been a passion of mine and the entire Senate to say hey, let’s get things moving.” 

One day after unveiling the bill, majority Republicans moved it through committee on a party-line vote, setting the stage for full Senate debate as early as next week.  But look for things to slow down in the House where Republicans say they will be looking at Gov. Reynolds' tax plan instead.   That proposal cuts taxes less, leaves corporate taxes alone, and takes longer to phase in.