Photo: Keegan Turnbough
(Des Moines, IA) -- House Republicans meet one of their goals for this year's legislative session after the House passes their flat income tax bill.
"We've been very clear since the beginning of the session. We want to pass a bill that doesn't pick winners and losers," says Iowa Speaker of the House Pat Grassley. "Ours doesn't do that. It puts it at 4%. We're not raising anyone's taxes."
Grassley says Iowa has $1 billion in taxpayer relief funds, and the flat tax is a way to get money back in the hands of the taxpayers.
A House Democrat says the money isn't going into the pockets of all Iowans, but just the Iowans who are well off.
"This is not a flat tax. A true flat tax would eliminate all tax exemptions, all tax credits," says Johnson County Representative Dave Jacoby. "What [House Republicans] are proposing is basically a different tax table that incredibly favors the wealthy."
The House Minority Leader agrees with Jacoby.
"This is a Republican tax proposal, and this Republican tax proposal helps the wealthy, helps them first, helps them most, and helps them best," says Polk County Representative Jennifer Konfrst. "That is not what we should be doing here in Iowa."
The proposed plan creates four tax brackets, and gradually reduces the current rates until all Iowans see a 4% income tax.
From 2023 to 2026, House File 2317 cuts taxes for the lowest income bracket by 0.4%, and cuts taxes for the highest income bracket by 2.5%.
Bill Sponsor Representative Lee Hein says Iowa wouldn't be the only state with a flat income tax. He points out both "Red" and "Blue" states with flat income taxes, such as Kentucky and Utah, or Colorado and Illinois.
"A 4% flat tax is a simple, responsible cut to all Iowans," says Hein. "It puts money back into the hands of the taxpayers."
The bill now moves to the Iowa Senate, after being passed by the House by a vote of 61 to 37. The Iowa Senate is considering its own version of a flat income tax bill, setting all rates at 3.6%. Iowa Governor Kim Reynolds asked for the 4% flat income tax in her Condition of the State speech.
House File 2317 also exempts retirees 55-and-older from income taxes on their individual retirement accounts.