Tax cuts to ease burden on Iowa families

Last week, two very important tax cuts were passed in the Senate that will help families and create jobs. The Iowa Earned Income Tax Credit was passed on a bipartisan vote. This working family tax cut will put more money in the pockets of families that are home to 37 percent of Iowa’s children.

The legislation, if passed by the House, also will help local businesses. The additional dollars returned to each family when they pay their taxes will help purchase milk, gas, school, clothes, make needed car repairs and pay overdue medical bills.

The federal tax credit was created with the leadership of President Ronald Reagan. It is now one of the most effective ways to help Americans rise out of poverty. It is especially important in Iowa, one of six states that taxes working families who earn less than poverty-level wages.

I hope the Iowa House quickly approves this tax cut as it did last year. Then it will be up to Gov. Terry Branstad to do the right thing for families this year.

I am often asked what’s the best way to help Iowa businesses, especially small and Main Street businesses. I think the answer, supported by both Republican and Democratic Senators and overwhelmingly passed in the Senate last year, is the only property tax proposal that avoids massive property tax shifts to residential landowners. This bill, known as Senate File 522, creates a $200 million Business Property Tax Relief fund. When fully implemented, it provides a 41 percent tax cut to four out of five Iowa commercial properties. Property valued at $390,000 or less will be entirely taxed at the residential rate, a tax cut of 41 percent. The remaining properties at the high end receive the full tax cut on the first $390,000 of value, and then are taxed at the commercial rate for the remaining value.

This approach focuses on helping small and Main Street businesses, and avoids sending tens of millions of dollars to out-of-state corporations. Almost every business property in many Iowa communities will see the 41 percent cut in their property taxes.