Simplifying Iowa income taxes
Special to the Pilot-Tribune
Today, the state of Iowa taxes you when you earn a dollar, again when you save it, again when you invest it, and again when you buy products. And finally, when you die, they tax you again! Iowa's tax system is unfair, complex, costly, and punishes work, saving and investing.
Simply stated, our onerous tax system is unable to help Iowa remain competitive with other states and prevents us from ensuring a better future for ourselves, our children and grandchildren. Our goal should be to simplify and lower taxes and create a system where the government taxes income one time at one low rate.
The only legitimate purpose of any tax is to provide revenue to pay for the cost of government. Iowa's families should understand clearly what government programs and services their taxes provide and thereby determine the amount of government for which they are willing to pay. Unfortunately, our current tax system has fallen prey to a multitude of unintended purposes including income redistribution, social engineering, and government micro-management of saving, investing and spending decisions.
Iowans have the right to demand that our tax system be simple, equitable, efficient and supportive of our state's great economic growth potential. Sadly, our current tax system treats individuals unfairly, exacts tremendous administrative and compliance costs, and hinders our economy from realizing its full productive potential. As a result, the opportunity for the citizens of Iowa to better their standard of living is jeopardized.
Mere tinkering cannot correct the enormous problems now codified in our current tax system. Partial reforms have been tried repeatedly, with limited success at best. Iowa must fundamentally rethink the manner in which income is taxed. In order to achieve genuine tax reform, we must think outside the box, eliminate the loopholes for special interests, and quiet the politically-motivated class warfare arguments.
A single rate tax encompasses the new thinking and fundamental change that is needed to create a simple, fair and pro-growth tax system for our state. Iowa's current tax code punishes people who work hard or take risks to improve their standard of living when their additional earnings push them into higher tax brackets. Our current steep tax rates crush work incentives and entrepreneurial spirit.
Because of high tax rates, many people find themselves working longer and harder and ending up with little to show for it. Our complex tax code deters businesses and individuals from moving into or staying in Iowa.
There is a clear and immediate need, as well as a building consensus, to reform and simplify the Iowa tax system. It is the right thing to do for the families of Iowa and now is the time!
Senator Larry McKibben, a Republican from Marshalltown, is chairman of the Senate Ways and Means Committee.