State tax changes at the forefront

BY SHAWN GUDE | MARCH 30, 2009 7:40 AM

Iowa City resident Deborah Thornton’s furor over a recent Democrat tax proposal was visible at an Iowa Legislature forum over the weekend.

“When you repeal the federal deductibility, that means you’re going to pay state taxes on taxes you [paid] to the federal government — not taxes on money that I spent on my kids’ clothes and shoes in school,” she said, her voice heightened.

But area legislators at the forum — all Democrats — hit back, arguing their plan would benefit thousands of Iowa families.

“Your statement would have been correct if we hadn’t lowered the [tax] rates,” said Rep. Mary Mascher, D-Iowa City, her typical cheery disposition now gone. “But we lowered the rates.”

“It’s going to make the system fairer,” said Sen. Joe Bolkcom, D-Iowa City. “I think it’s time to shift the tables a little bit, so that the people that have been reaping the disproportionate amount of benefits in this economy — mostly well-off people — it’s time to shift some of it down to the workers.”

The exchange was symbolic of the fight Democrats are sure to face over the tax plan, which they unveiled last week. While Iowa is one of only a few states to allow federal deductibility on state income taxes, anti-tax groups such as Iowans for Tax Relief and the Iowa Taxpayers Association have balked at the new plan.

Under the proposal, the vast majority of those making under $125,000 would receive a tax cut, while individuals and small businesses in higher tax brackets would see their taxes go up.

“Those numbers are good numbers — there are going to be tax cuts for a lot of people,” said Rep. Larry Marek, D-Riverside. “This is one way we can help our economy, is having tax cuts for our people that aren’t the top wage-earners.”

Legislators at the March 28 forum discussed a number of other topics, including the one-cent sales tax Iowa City residents could opt to tack on for flood clean-up money.

While Mascher conceded sales taxes are typically unpalatable because of their disproportionate effect on the poor, she urged citizens to approve the measure.

“I think this is a critical vote for our community, and I think sometimes we as Democrats get caught up on what’s progressive and what’s regressive in terms of taxes,” Mascher said. “But this is really and truly salvation for our community.”

Rep. Vicki Lensing, D-Iowa City, agreed, asserting the need to educate the incredulous.

“I think for a lot of people who might not be in favor of a sales tax, if they understood the specific use for this, they would be more inclined to vote for this,” Lensing said.

The special election is on May 5, but in-person voting is now available at the county auditor’s office.

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