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The state of Iowa collected over half-a-billion dollars more in taxes during the last 12 months than during the last fiscal year.
The Fiscal Year for the State of Iowa ended Sunday. Tax revenue growth was ahead of expectations by nearly $100 million dollars. The State of Iowa took in more than $9.3 billion in taxes and fees during the past 12 months.
Officials say it’s hard to estimate how much of the tax windfall is due to higher wages in Iowa and how much is due to a change in a state income tax deduction. Iowans get a deduction on their state income taxes for federal taxes paid. That deduction has declined because of the tax cuts enacted at the federal level.
Researchers at an Iowa City-based think tank say policy-makers should consider how low-income Iowans would be affected by raising the state sales tax to finance water quality projects. If state officials hike the sales tax by one percent to raise money for water quality improvements, the Iowa Policy Project proposes raising tax credits that benefit the working poor and low-income renters.
David Osterberg, lead author of the Project report released today. He supports increasing the sales tax. He says the poorest two-fifths of Iowans would pay an extra 124 dollars per year if the sales tax goes up one percent. He said boosting the state Earned Income Tax Credit and a renters’ credit would help offset that.
