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Tax reform bills advance in the Legislature


The Iowa House Ways and Means Committee has approved the House GOP tax reform plan, setting the stage for the bill to go to the House floor for debate. The committee approved House Study Bill 626 late Tuesday. A date for debate on the House floor has not been set. The House plan calls for a four-year phased-in reduction of the individual income tax until it reaches a flat rate of 4%. It also seeks the elimination of taxes on retirement income, and to divert $829 million from the Taxpayer Trust Fund over six years to cover the cost of the reductions. Unlike similar proposals in the Senate and from Gov. Kim Reynolds, the House GOP plan does not seek any changes in the state’s corporate tax structure. The Senate Republican plan would gradually reduce the corporate tax rate to 7.8% over five years while eliminating some credits and incentives. The plan would also reduce the individual income tax over five years until it reaches a flat rate of 3.6%. The Senate Ways and Means Committee passed that chamber’s version of the bill earlier this week, allowing that measure to go to the full Senate. Neither chamber has taken up bills introduced by Reynolds as they continue to negotiate the various proposals. Reynolds made reducing the state’s individual income tax and making it a 4% flat tax a priority in her Condition of the State address on Jan. 11. Reynolds and leaders of the state’s business community have said reducing the individual income and corporate tax rates will help address the state’s workforce shortage by making Iowa more competitive and attracting more people to live and work here.

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