GOP Tax Bill on Fast Track; Democrats Cry 'Regressive'

May 2, 2018

The 2018 tax cut debate continued at the statehouse Wednesday with a “walk-through” of the general outlines of a plan agreed to by Republicans in the House, Senate, and governor’s office.

Democrats lashed out against the latest version of the bill cutting income taxes and eventually corporate taxes by $2.8 billion over six years.

It’s a must-do for majority Republicans before they bring the overtime 2018 legislative session to a close.   

"This bill is all about Iowa workers being able to keep money in their paycheck." -Sen. Randy Feenstra

The bill’s cost to the state treasury will grow annually starting with just over $100 million next year, growing to $389 million by fiscal year 2022.   The annual cost would grow to more than $600 million after that, if state revenues are strong enough to fully implement the plan.

“This bill is all about Iowa workers being able to keep money in their paycheck rather than giving the money to the government,” said Sen. Randy Feenstra, R-Hull.     

Feenstra said the plan is fiscally responsible and will allow Iowa businesses to compete in the global economy.  

Democrats sharply disagreed.

“It doesn't make sense if you're making midyear budget cuts to cut taxes,” said Sen. Rob Hogg, D-Cedar Rapids.  “That fails the Iowa common sense test.”  

Democrats object that the bill leaves largely untouched the hundreds of millions of dollars in tax credits that go out to Iowa businesses each year.   

"Raising sales taxes is really a way to pay for this income tax cut." Sen. Joe Bolkcom

It does eliminate two tax credits favored by environmentalists, the solar energy tax credit and the geothermal tax credit.  And it increases a tax credit that benefits private schools, the School Tuition Organization tax credit.

The bill increases an array of sales taxes Republicans say are needed to modernize Iowa’s tax system.  

Sales taxes would be levied on internet sales and digitally delivered products such as electronic books and streaming audio and video.   

Transportation  services such as Uber and Lyft would be taxed, along with traditional taxi rides.  

Democrats called that regressive. 

“You’re increasing taxes on the poor to give the richest three percent of Iowans 55 percent of the money that will be passed under this plan,” Sen. Matt McCoy, D- Des Moines, said.  “We're talking about grandma's ride to the grocery store and we're going to put a sales tax on her ride.”   

But Feenstra said low to middle income Iowans will see the biggest reduction in their income tax rates.  

The Iowa Senate is planning a Saturday debate on the bill to accommodate a Senate rule requiring a three-day delay between committee approval and floor debate.

That would clear the way for adjournment possibly this weekend, or into next week.