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Legislature addresses tax reform

Late last year, Congress reformed the tax code at the national level, reducing federal taxes on Iowans by $1.8 billion per year.  However, because we use federal deductibility in Iowa, our state taxes would increase as a result of the national reform. This is projected to cost Iowans an additional $107 million in tax year 2018 and grow to $153 million in tax year 2019.
 
Both chambers of the Iowa Legislature are working on tax reform measures. 
 
A proposal in the Iowa Senate is expected to cut personal and corporate income taxes by about $2 billion over five years. The House proposal would cut income taxes by about $1.2 billion over five years. The standard deduction for individuals and married couples will increase.
 
The Catholic bishops of Iowa have discussed two basic moral principles that should govern the collection and distribution of taxes as they benefit the State of Iowa and its people.
 
Legislators should practice distributive justice wisely, so that all people can share in the benefits of life in society, for example, education, health care, protection of the environment and security. There should be a special concern for the poor and vulnerable who cannot provide themselves with what is needed to live in dignity. The Iowa Catholic Conference supports raising adequate revenues for a strong social safety net.
 
Taxpayers should practice contributive justice, cooperating with the government to contribute to the common good by paying their fair share of taxes. Through contributions collected by taxes, we share the blessings that God has given us so that these resources can be used for the good of all. A just and equitable system of taxation ensures that everyone contributes to society according to his or her ability to pay.
 
Levying and paying taxes are essential acts of government and of mutual dependence. But when all are mindful of the needs of all, then the rights and dignity of each individual are safeguarded.
 
Iowa's annual general fund budget is a little over $7 billion. A key question is whether tax cuts of the magnitude being discussed will allow adequate revenues for public education, Medicaid, public safety, a strong safety net, and other acts of government essential to the common good.A greater share of taxes paid will be shifted from the income tax to the sales tax, which typically falls more heavily on lower-income people.
 
Regarding specific provisions:

  • We appreciate that proposals have left the Earned Income Tax Credit for low-income working Iowans untouched.
  • We support an increase in the amount of tax credits and the number of parents qualifying for scholarships through the current School Tuition Organization Tax Credit.
  • We support that the bills "couple" with federal tax law changes regarding 529 plans to benefit parents who pay tuition to a nonpublic K-12 school.
  • There is a provision that expands an exemption from sales tax for the renting of rooms in religious retreat centers so that it also applies to the state tax. Under current law, that exemption only applies to the local tax. 

Please contact your State Senator and Representative with your opinion about tax reform. 
 

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