Democrat leaders in the Iowa House and Iowa Senate, along with Governor Culver are all in agreement that they want to prevent Iowans from ducting all of their tax payments to the federal government on state income tax returns. This is commonly referred to as federal deductibility.
The removal of this deduction means a tax increase on Iowans to the tune of $600 million.
The move comes just days after the Revenue Estimating Conference told lawmakers that they need to cut an additional $130 million from the current budget. Making matters worse, the state has to deal with a $1.1 billion gap between expenses and revenues over the next 15 months. Many believe that Democrat legislative leaders are making a money grab to help solve the huge budget mess they have created by overspending.
In an interview with Mike Glover or the Associated Press, Speaker of the Iowa House, Pat Murphy said, “Ending the deductions would bring in hundreds of millions of dollars that would enable the state to reduce tax rates for most Iowans.” In other words, Murphy wants to raise taxes to lower taxes.
Ed Failor, Jr., President of Iowans for Tax Relief, told The Iowa Republican, “Be critical of what you hear come out of their mouths. They will talk about rate reduction, equity, and revenue neutrality. It is all a smoke screen for a $600 million tax increase on all Iowans.”
Failor states that by eliminating federal deductibility, Democrats will hurt lower and middle income Iowans who rent their homes, as these people can’t deduct mortgage interest or property taxes. Failor claimed that removing federal deductibility would “take away their largest tax deduction.”
Failor and Iowans for Tax Relief are ready to unleash a direct mail, radio, and television campaign to urge Iowans to help them stop the Democrats’ latest tax increase.
“It is incomprehensible that Democrat leaders are willing to force all Iowans to pay a tax on a tax. These Democrats find it reasonable for the State of Iowa to tax you on the money the federal government withheld from your paycheck – money you never had in your wallet,” Failor concluded.
Click here to read Failor’s op-ed on federal deductibility from earlier this month.
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