Taxpayer and business advocates agreed that cutting Iowa’s income tax could boost the economic recovery from the effects of the pandemic, which slowed Iowa’s economy, said Tom Sands, president of the Iowa Taxpayers Association.
For the 2021 legislative session, the association will work with the governor’s office and legislators to enact more tax cuts at the corporate level.
“And on the individual level, obviously, because a lot of smaller businesses have to file through or pay their taxes anyway, through the individual income tax levels,” Sands said.
Matt Everson, state director in Iowa for the National Federation of Independent Business-Iowa, also plans to push lawmakers to cut income taxes.
“I would say, income tax reductions as quickly as possible, would help stir and stimulate Iowa’s economy more than any other system you could set up,” he said.
Everson said revenue numbers came out for the state and it’s on track for almost 4% growth next year.
“All our coffers are full,” Everson said.
Small business owners will put the tax cuts right back into their businesses, Everson said.
While the federal government can hand out hundreds of billions of dollars for relief, whether it is Payroll Protection Program (PPP) funds or personal protective equipment, states are restricted as they must balance their budgets.
Iowa was ranked among the worst taxed states in the nation, Everson said. Some tax cuts were passed in 2018, but he said the time is right to go beyond those cuts. The NFIB will push legislators to act on more income tax cuts.
“Not only does it get into the small business owner’s hands, it gets to the people who are working. It's in their hands for anybody who works and who pays income tax will get a break as well. So it's really a win-win, the most fair, the best, easiest way to get money into businesses and employees,” Everson said.
Everson stated that Iowa has an opportunity with its revenues growing next year and all accounts in good shape, including unemployment insurance and a $1 billion rainy day fund, but if the state doesn’t cut taxes, Everson and Sands expect that the economy will grow at a slower rate.
People are fleeing other states, so now is a time to make a commitment to lowering taxes and letting people know Iowa is open for business, so come to our state, Everson said.
Sands said it’s tough to predict what would happen if tax cuts aren’t enacted because of the different nature of businesses.
“Right now, the next 12 months in businesses are all over the board, you get some businesses that are seeing they’re fully back to work, their revenue is up. Where you get other sectors that have just had the rug pulled out from under them and are months away from recovering,” Sands said.
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