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Governor Culver adds his weight to repeal of Iowa's deduction for federal taxes

February 25, 2009

Governor Chet Culver, a Democrat, today was asked during a telephone news conference whether he favored getting rid of the provision which lets Iowans deduct their federal tax bill from their income before they calculate their state income tax liability.
"I think we should have a conversation on that this session," Culver said. "There are a lot of advantages to doing that,: He added it is something that he and legislators should "seriously look at."

I asked what the advantages were.

"It's kind of complicated," Culver said, with a laugh, "and anything we can do to kind of simplify and streamline the tax code I'm for it. It's somewhat outdated in the way it's applied and I think that it might be time to just kind of look and see if we can make ....(the tax code) more straightforward and clear."

I think it would be good to build the deduction into Iowa's rates. A serious tax reform effort could achieve much lower rates and a much more business-friendly Iowa tax system. That would include reforming or repealing our highest-in-the-nation corporation tax rate and eliminating the thirty-plus special interest tax credits. Unfortunately, the Democratic leadership says "reform" means raising taxes on high incomes, which shows they're serious about raising taxes, not reform.

Tags: Chet Culver.federal deductibility.iowa tax policy.