Hagenow Statehouse Report: Flat Tax Simpler, Fairer

By Rep. Chris Hagenow

Since the beginning of the legislative session my colleagues and I have been working on ways to leave more money in Iowans’ pocketbooks.  With our budget balanced and our fiscal house in order, now is the time for serious, meaningful tax relief. 

In light of this goal, I was proud to vote for the passage of House File 3 this week, which creates a choice for Iowans when paying their income taxes. They can choose between the current system, or a new 4.5 percent flat tax with no deductions or credits.

What do you think about adding a flat-tax option to Iowa's income tax code? Tell us below in the comments.

Not a single Iowan will be required to pay higher taxes under this plan.

This bill, simply put, makes Iowa’s tax system simpler, flatter and fairer. The non-partisan Legislative Services Agency, predicts that approximately 39 percent of Iowa tax filers would choose the new flat tax option, which would reduce their overall tax burden by close to $400 million.

The income bracket that benefits the most from this flat tax option is those Iowans who earn between $30,000 and $40,000.

Another victory for Iowa taxpayers was an amendment to our flat tax proposal which sets aside leftover tax money at the end of each fiscal year for the purpose of returning it to Iowans. We established this fund two years ago, but it is currently capped at how much of the unused tax money can be returned to those who overpaid. With this new plan, the fund would no longer be limited.

Because of the work we have done to balance the budget, our state government now collects more than is necessary to fund the priority needs of Iowans. Because of sound fiscal management, we are now in a position to return the overpayment of taxes back to Iowans and to provide meaningful income tax relief. 

This bill and its amendment are consistent, fair and simple and treat all Iowans equally. Everyone has the same choice between the current system and the new flat tax option. Additionally, each Iowan receives an equal credit when the state collects more than it needs.

One of our core budgeting principles has been that we should not use one-time sources of money to fund ongoing obligations. The ending fund balance is exactly the kind of one-time money that should not be used to grow government. Returning it to those who overpaid is the right thing to do.

I am proud to be able to vote for meaningful tax relief that benefits Iowans at all income levels. This bill is a victory for Iowa taxpayers. 

(Rep. Chris Hagenow, R-Windsor Heights, represents District 43 in the Iowa House of Representatives, where he is the majority whip. Contact him at chris@chrishagenow.com or 515-275-1652.)