Iowa governor signs flat tax bill into law

DES MOINES, Iowa (AP) — Iowa Gov. Kim Reynolds on Tuesday signed into law a bill that phases in a 3.9% flat tax over four years, eliminates taxes on retirement income and lowers taxes for corporations at an estimated overall cost of about $2 billion in lower annual total state income when fully implemented.

Republicans pushed the bill through the House and Senate last week in one day, saying they were making historic changes to help Iowans and the state’s economy.

Reynolds signed the bill at LBS, a Des Moines manufacturer and distributor of materials for the production of books and luxury packaging. She was surrounded by Republican legislators and business leaders.

That same day, she was ordered by a state auditor to return $450,000 in federal relief funding she not only misspent but tried to conceal it by passing it through the state Department of Homeland Security and Emergency Management.

“With this bill, Iowa is now the fourth lowest for individual income tax rates in the nation,” Reynolds said. “There’s never been a better time in Iowa for bold, sustainable tax reform.”

Few Democrats supported the proposal, saying it offered little help for lower and middle class residents, who could most benefit from more targeted tax cuts or enhanced government services.

“Kim Reynolds’ agenda rewards her corporate donors, not hardworking Iowans. Under this reckless plan, she’s handing millionaires an extra $1,200 a week, while teachers and truck drivers get less than $12 a week,” said Iowa Democratic Party Chairman Ross Wilburn in a statement.

Reynolds spoke only hours before she was scheduled to give the Republican response to Democratic President Joe Biden’s State of the Union address. Reynolds spent time handing out pens and mingling with those in attendance, but she declined to take questions from reporters.

Legislators of both parties noted the timing of the tax cuts, just ahead of Reynolds national speech.

“I think she has an opportunity tonight to tell the Iowa story over the last couple of years and certainly tax reform and this bill that we signed today is a huge part of that Iowa story and what we’ve been working on for six years,” said Senate Republican Leader Jack Whitver.

Democrats accused Republicans, who hold majority control in the House and Senate, of rushing the bill through in time for Reynolds’ speech.

“We make policy through deliberation, through negotiation and through honest debate,” House Democratic Leader Jennifer Konfrst said. “What we saw last week was rushing through a $1.7 billion tax bill so that she could have something to talk about tonight on the national stage. That’s not the way things should work up here.”

Democrats and some tax policy analysts argue the steep revenue cuts will result in future economic problems, risking inadequate funding for schools, prisons, mental health programs and other government provided functions.