Income taxes are on the minds of many Iowans as April 15th has passed this week. For many Iowans who work 40, 50 and even 60 hours a week to make ends meet for their families, tax season also results in paying a price for working diligently to put food on the table, fuel in the car and our children through school.
Throughout this legislative session, we have heard a lot about the state’s budget surplus due to strong fiscal management. However, in discussing issues with residents throughout Senate District 14, I continue to hear one common concern – how can the state, in good conscience, continue to gouge people in lieu of collecting more income taxes while touting a significant budget surplus.
This session, along with property tax reform, Senate Republicans are working hard to reform Iowa’s individual income tax system. I am in full support of a Senate Republican plan that changes the tax code for the benefit of Iowans and enables hard-working taxpayers to keep more of their money.
The income tax reform proposal provides for a comprehensive overhaul of the Iowa income tax system giving Iowans a choice when paying their income taxes: either the current system or the new simplified system. Compared to current law, the proposed plan provides an overall 5 percent reduction in income tax liability in the first year of enactment, an overall 10 percent reduction in liability in the second year, and an overall 15 percent reduction in liability in the third year and beyond.
On average, an Iowa taxpayer receiving a decrease under the new simplified plan would see an average tax reduction of $360 in tax year 2014, and $517 in tax year 2015. In realistic terms that money means a car payment, school clothes or utility payments for Iowans and would greatly ease the burden of a tight family budget. The new, simplified option available to taxpayers flattens the Iowa income tax bracket and gets rid of the itemized deductions by replacing it with a higher standard deduction.
If Iowa wants to continue to create jobs and grow the economy, we must provide comprehensive tax reform that is fair and responsible. That’s why I strongly support an income tax relief plan as a step toward true tax reform needed in this state.
Tags: individual income tax reform, Iowa Senate, property tax reform