Time for Tax Relief


We wrapped up the third week of the session with the Condition of the Guard Address given by Major General Tim Orr, Adjunct General of the Iowa National Guard.

I was impressed by the work they have done to reduce the unemployment rate of our returning Guard members.  Gen. Orr outlined that nearly 28% of returning Iowa soldiers were looking for work at the end of 2011.  He laid out the efforts that they have undertaken to remedy this problem– in coordination with Iowa Workforce Development, Iowa Department of Veterans Affairs, the Greater Des Moines Partnership, U.S. Department of Labor, Principal Financial Group and the Guard’s Job Connection Education Program – they have reduced this number to only 6% today.

I was pleased to hear this update from General Orr.  Please keep him and all of our servicemen and women and their families in your thoughts and prayers.

As I’ve stated in the past, I believe now is the time for serious, meaningful tax relief.  I have been clear that we are not dug in on any one idea on tax relief; we want to be able to talk about several options.  One of the options that we have filed is House File 3 aimed at reducing Iowan’s income taxes.

House File 3

  •  Gives Iowans a choice when paying their income taxes, either the current system or a 4.5 percent flat tax with zero deductions.
  • Raises the filing threshold so that the first $6,235 (or $12,450 for married couple) would not be taxed.  This also has the effect of eliminating the bottom three (.36%, .72%, and 2.43%) tax brackets.
  • Ensures any taxpayer who took advantage of the flat tax would not be eligible for any nonrefundable or refundable credit otherwise allowed in the current system.

There is a fork in the road – should the legislature take the path of spending limited one-time revenues on recurring expenses (i.e. growing government) or should the legislature send this money back to Iowa taxpayers?  I believe any overpayment of tax dollars belongs in the pockets of Iowans, not as a pot of money for the politicians to spend on pork or grow government in the short-term knowing full well that the funding will dry up in the long term.

With eminent and significant federal spending cuts and the impact of the drought yet to be felt, spending the overpayment sets Iowans up for cuts in the not too distant future.  This type of short-term thinking led to massive overspending and then across the board cuts between 2007 and 2010.  We cannot allow Iowans to suffer this kind of mismanagement again.

As usual, I enjoy hearing your thoughts on this and other important issues.  Please feel free to contact me at my office at (515) 281-3521 or by email at kraig.paulsen@legis.iowa.gov