Creating Good Tax Policy
ITR's Five Principles of Sound Tax Policy states taxes in Iowa should be:
- Fair
- Competitive
- Transparent
- Limited
- Protective of Freedom
A tax code following these principles while reducing the tax burden on Iowans will allow everyone to keep more of their hard-earned dollars. This will encourage economic growth and boost additional investment, ultimately providing more revenue to address the priorities of state government.
Iowa's Path Forward
Iowa’s 2018 income tax reform started a multi-year process of rate reductions, increased federal conformity, and larger deductions for small business owners, which are all good things. The largest income tax rate cut, from 8.53 percent to 6.5 percent, will not occur before 2023. It is the last scheduled change, and only when these two conditions are met:
- State revenue surpasses $8.3 billion (FY 2020 revenue was $7.55 billion)
- State revenue increases at least four percent that fiscal year
The economic hardship created by Covid-19 has made these conditions harder to achieve. How should Iowa move forward? Click the link below to take a short income tax reform survey:
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