Senate panel votes to end Iowa estate tax
Republicans on a Senate committee have voted to phase out the estate tax.
The bill would also accelerate the plan to phase in state income tax cuts. Democrats oppose the moves, warning that the state budget could take a billion-dollar hit within a few years.
Sen. Pam Jochum, D-Dubuque, said the original 2018 plan had “safeguards” in place, so income tax cuts were only triggered if total tax revenue from the state were reaching certain levels, ‘so that deep cuts weren’t going to be required in public safety – we wouldn’t have to defund the police, that we would be able to meet our education obligations our children and all those other services and programs that the people of Iowa need.
Sen. Dan Dawson, R-Council Bluffs, said for Iowa to be more competitive, the tax burden must be reduced.
“This is permanent tax relief for the vast majority of Iowans earning income in our state,” Dawson said during debate of the bill by the Senate Ways and Means Committee.
The state has no “compelling interest” in collecting inheritance tax, Dawson told his committee colleagues.
“Whoever you choose to give your money to in the end after you leave this Earth is between you and the individual and not some concocted and morbid 24 page section of code that says you can do it at 0% or give that person 15%,” Dawson said.
Under current Iowa law, lineal descendants — that is, children, grandchildren, and great-grandchildren — pay no tax on inherited property. Siblings and in-laws pay 5-10%, while uncles, aunts and cousins can pay up to 15%.