DES MOINES, Iowa — After Gov. Kim Reynolds called for tax reform in her Condition of the State address, Senate Republicans released their plan Wednesday.
The Senate proposal echoes calls from House Republicans and the governor to eliminate retirement income taxes. It would also cut the corporate tax rate by 2% to a flat 7.8%. The House plan does not cut corporate taxes.
The Senate plan sets a flat individual income tax rate of 3.6% by 2027. It would also restructure the Taxpayer Relief Fund by converting it to an "Income Tax Elimination Fund" to reduce future income taxes and eventually eliminate personal income taxes altogether.
“When fully implemented, this bill will make Iowa’s individual income tax rate the 4th lowest in the country instead of the 8th highest as it is today," said Senate Majority Leader Jack Whitver (R-Ankeny). "It will save the average taxpayer $1,590 annually."
The Senate's plan also increases the sales tax to seven percent starting in 2023, through 2050. The House plan does not.
Senate Minority Leader Zach Wahls (D-Coralville) said Democrats want to see targeted tax cuts for the middle class.
“Senate Republicans won’t solve the Reynolds Workforce Crisis with another tax giveaway to millionaires and big corporations," Wahls said. "The Republican plan would result in higher taxes for hardworking Iowans and the defunding of public education, public safety, and health care services."
The House plan has been assigned to the Ways and Means Committee. The Senate's version is expected to be filed later this week, and a draft of their plan is below:
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