Iowa Governor Kim Reynolds proposes 4% ‘flat tax’ during address to lawmakers

Published: Jan. 11, 2022 at 9:10 PM CST
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DES MOINES, Iowa (KTIV) - During her “condition of the state” speech, Tuesday night, Iowa Governor Kim Reynolds pitched a “flat tax” that promises to cut taxes for all Iowans. In addition to tax cuts, Governor Kim Reynolds also promised new laws to incentivize unemployed Iowans to get a job, and additional education reform measures.

When it comes to taxes, Governor Kim Reynolds wants comprehensive reform that cuts taxes for all Iowans. “First, it eliminates our complex system of multiple tax brackets and sets one tax rate of 4%,” said Gov. Kim Reynolds, (R) Iowa. “Flat and fair.” The cuts will occur over the next four years. But in the first year alone, taxpayers will save almost $500 million. And by 2026, when the bill is fully implemented, an average Iowa family will pay over $1,300 less in taxes, which is on top of their $1,000 tax cut from the 2018 bill.

Reynolds also proposed eliminating taxation of retirement income. “For the vast majority of retired Iowans-- those who rely on their 401K, IRA, or pension-- that’s not just an income-tax cut,” said Reynolds. “it’s a full income-tax repeal.” The governor also wants to eliminate the tax on cash-rent payments to farmers after they retire.

Today, a worker shortage is a concern for countless states, including Iowa. “There are many reasons for the worker shortage, but we need to recognize that, in some cases, it’s because the government has taken away the need or desire to work,” said Reynolds. “The safety net has become a hammock.”

Reynolds proposes revamping the state’s unemployment system. “I’ll be introducing a bill that lowers benefits to 16 weeks-- about four months-- and ensures that those collecting unemployment cant turn down suitable jobs while living on taxpayer funds,” Reynolds said. The governor announced the creation of a separate re-employment division focused on helping Iowans get back to work.

Reynolds is also pushing education reform measures to bring “transparency”. “All schools should be required to publish what they’re teaching,” Reynolds said. “There’s no reason to hide it. At least no good reason.” Reynolds also wants parents to know what books their kids reading. “Parents should know what their kids have access to, and they should have a timely process to address their concerns,” said Reynolds.

If parents are still unhappy, Reynolds will introduce legislation that allows middle and low-income families and students “to receive a portion of the ‘per pupil’ funds allocated annually by the state to move their child to the education system of their choice.” Reynolds says 70% of those funds will go directly into an account for families to customize their child’s education. The other 30% to the state’s small school districts. “We want to ensure our small schools stay strong while, at the same time, empowering parents to choose what’s best for their child,” Reynolds said.

Reynolds also announced the state will use federal COVID relief funds-- specifically meant for schools-- to award a $1,000 retention bonus to teachers who stayed on the job through the pandemic, and who will continue teaching next year.

Democrats say Governor Reynolds’ plans to put unemployed Iowans back to work doesn’t address the whole problem, which also includes affordable childcare, and affordable housing. They say the governor didn’t include any specifics in those areas. And, Democrats say, the governor offered few specifics on how her plans would be paid for. “We need to look at the details,” said Rep. Jennifer Konfrst, (D) House Minority Leader. “We need to know what this is going to cost, what services will be cut. What will the true impact be on all Iowans? And, really, we’re hearing so many different things from the House and the Senate. This is far from a done deal.”

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