The Republicans in the Iowa Senate have approved another major tax change. This would use state taxes instead of local property taxes to fund the state’s mental health system.
In addition, the bill approved last night would create a new property tax credit for low-income elderly people aged 70 and over and abolish a property tax in 27 school districts that is used to maintain playgrounds and pay for other community education programs.
It would also end government payments to schools, cities and counties to offset the lowered business tax rates. Senator Dan Dawson, a Republican from Council Bluffs, said rising house prices are facing Iowan’s higher property taxes, and that legislation will help lower those bills.
“We didn’t come here to do halfsies,” said Dawson. “We came here to undertake bold reforms and this bill, taken as a whole, is a bold reform.”
Last month, Senate Democrats joined Republicans to approve another bill to abolish state inheritance tax and accelerate income tax cuts. However, the Democrats voted against this latest Senate GOP tax package. Senator Joe Bolkcom, an Iowa City Democrat, said the county property taxes used for mental health services are a more reliable source of funding than the legislature-approved funds.
“If this legislation becomes law for any reason, it will defuse our mental health system,” said Bolkcom.
House Republicans have cautioned against making major tax changes this year due to the economic uncertainty caused by the pandemic. Governor Reynolds has joined a lawsuit over a provision in the latest federal pandemic relief package that some have interpreted as an obstacle to state efforts to cut taxes. Senate Republicans estimate the bill they passed last night would cut property taxes nationwide by $ 100 million.