Iowa House Speaker Says Pandemic Relief Strings May Block State Tax Cuts

Des Moines, Iowa — The top Republican in the Iowa House says the latest federal pandemic relief package may prevent Iowa and other states from cutting taxes this year.

Speaker Pat Grassley of New Hartford says House Republicans are waiting on next week’s report on state tax revenue, too.

(As above) “There’s a lot of unanswered questions that exist right now,” Grassley says. “I think first and foremost, we need to get an answer on whether what the feds passed…if you even have the ability to pass tax cuts.” 

The State of Iowa will receive one-point-three BILLION dollars from the American Rescue Plan passed by congress to cover unexpected expenses during the pandemic. The bill prevents states from using that money as an off-set to cut taxes.

(As above) “I think we need to have some clarity on what that would look like first,” Grassley says.

Grassley says the other consideration for House Republicans is current state tax revenue and whether there is room to speed up income tax cuts and eliminate the inheritance tax. Senate Republicans voted to do that Wednesday.

(As above) “With the inheritance tax piece, I know we have interest in that within our caucus, but I think it comes with a $90-$100 million price tag,” Grassley says. 

Senate Republicans have also voted to implement previously-approved income tax cuts without confirmation that total state tax revenue is growing by at least four percent. Grassley says House Republicans aren’t ready to vote for that plan.

(As above) “We’d like to work towards that,” Grassley says, “but theirs may be a little bit more aggressive than what we may be interested in at this point.” 

However, Grassley says these concerns could become moot, though, if a state panel that meets next week sets future tax projections high enough.