Statewide Iowa — The governor’s budget director says there’s likely to be more than two billion dollars in the state’s Taxpayer Relief Fund by this summer. There’s more than a billion dollars in the fund now.
Kraig Paulsen, the acting director of the Iowa Department of Management, says tax collections are ahead of expectations and significantly above state spending plans.
In a written statement, Republican Governor Kim Reynolds called the overcollection of taxes unethical and said she will explore making significant tax cuts in 2022. Senate Republican Leader Jack Whitver of Ankeny says cutting personal income taxes is at the top of the GOP’s 2022 legislative agenda.
Whitver’s ultimate goal is complete elimination of Iowa’s income tax for individuals and couples. Whitver says Republicans would consider reducing the income tax for corporations if there’s a move to end or reduce refundable tax credits for corporations.
That’s because most business owners report the revenue from their business on their personal income tax returns. Democrats warn state tax revenue has been boosted by federal pandemic relief and is likely to fall as the tax cuts Republicans previously approved take effect. And Senate Democratic Leader Zach Wahls of Coralville says complete elimination of Iowa’s personal income tax would lead to a dramatic increase in the state sales tax.
Wahls says Democrats favor targeted income tax cuts for low and moderate Iowans rather than an across the board reduction that yields a higher proportion of relief for the wealthiest Iowans.
Wahls says an overall tax reduction would lead to cuts in state spending on schools and in the Medicaid program that provides health care coverage and other services to 775-thousand Iowans.
