Hull, Iowa — With the 2017 legislative session ending over the weekend, one northwest Iowa Republican senator is already working on tax reform for the 2018 session.
Senator Randy Feenstra of Hull says has been using computer models for the past few months to experiment with changes in the tax code.
Iowa’s top tax rate for individual taxpayers is nearly nine percent. But it’s NOT nine percent when compared to how taxes are calculated in other states. That’s because Iowans get to deduct their federal income taxes from their income, before calculating how much they owe the State of Iowa. For the first time in decades – at the urging of key business groups – Republicans are seriously talking about getting rid of that deduction. Senator Feenstra warns, though, that the deduction has to be phased out.
Feenstra is chairman of the Senate committee that drafts state tax policy. He says delaying the debate about income taxes changes means legislators will find out what changes may be made at the federal level — because those changes may force adjustments in a state-level tax plan.
Democrats point to the experience in Kansas, where Republicans enacted major tax cuts five years ago — and made 330-thousand small businesses exempt from taxes. It has created huge state budget deficits and Kansas lawmakers are struggling to figure out how to fix things. Feenstra says Republicans in Iowa do not intend to follow the Kansas playbook when it comes to tax policy.
Feenstra says Republicans in the Iowa legislature have another seven months to run ideas through computer models and come up with something that could simplify and reduce income taxes, but not blow a hole in the state budget.
