2015 Focus Should be on Income Tax

When America was founded, our founding fathers envisioned a country where the states were “laboratories of democracy.” This meant they wanted to give states the flexibility to experiment in the governing of their state. They believed the best ideas would rise to the top and states would adopt the best ideas from around the country.

As a legislator in Iowa, it is my job to find and pass the best laws from around the country. It makes sense to build upon the great ideas, while avoiding the mistakes of other states.

One area I am extremely interested in is tax policy, specifically the state income tax. I believe income tax is one of the most important factors in economic growth, as it can be an incentive or can be a deterrent to people and business.

I strongly believe that if we want to compete in the 21st century, we must continue to keep up with our competitors. In other words, we need to see what our neighboring states are doing with their tax policy and design a tax policy to compete with them.

If you look around the country, 65% of the jobs are being created in nine states. The common factor with those nine states is they do not have an income tax. When looking at the Midwestern states, South Dakota does not have an income tax. Kansas, Oklahoma, Wisconsin and Nebraska are all trying to reduce or eliminate their income tax.

A great example is Oklahoma, which has been reducing its income tax for the past decade. In 2004, Oklahoma had an income tax rate of 7%. Since that time, they have gradually lowered the rate to 5.25%, a 25% income tax cut. In that same time period, their state revenue has grown from $5.73 billion to $7.86 billion, a 37% increase. So in cutting income tax by 25%, revenues increased by 37%, showing the economic growth that occurs when you work to make a more favorable tax environment.

While it is too late to make an aggressive push on an income tax cut this session, it is something that I am working hard on. I am hopeful that the strong financial position of the state of Iowa will allow us to make a strong push next session on reducing your Iowa income tax burden!





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