Let me start by saying I think it’s a bad idea to get rid of federal deductibility right now.
Democrats who run the Legislature want to eliminate the ability of Iowans to deduct what they pay in federal taxes from what they owe the state. Supporters would use the additional tax collected to give what they call middle class tax cuts while raising taxes on some higher income folks. They say it would make the structure more progressive.
The right side of my brain and its left lobe have had a spirited discussion about this for several days. My right side wins, by a nose.
I don’t think it’s the right time to raise income taxes on anyone. The economy is dealing out plenty of harm to plenty of people.
Yes, I supported a local-option sales tax increase, a temporary one to help a flood-battered city. Perhaps that’s inconsistent, but I call each issue like I see it.
In this case, I’m not convinced the benefits of elimination outweigh that potential for harm. The tax cuts are small. The effect on progressivity is minimal. Arguing that elimination makes our rates look better to outsiders assumes that those folks can’t use a calculator to easily figure out our real rates today.
And if this is so crucial, why didn’t I hear a single candidate talk about it on the campaign trail?
That said, I don’t think it’s a disastrously bad idea, as so many opponents are screaming. If times were good, and the state had enough scratch to eliminate the deduction without tax increases, I’d be on board. Our income tax system should be decoupled for good from the zigs and zags of the federal government.
But here’s something I dislike even more – the sanity-free politics that has exploded around this issue.
Yet again, our dysfunctional politics has prompted mass partisan armies to drop A-bombs on each other in a desperate effort to capture a piece of political territory the size of a postage stamp. No issue is too small in this atmosphere to draw all the fury hell hath.
Maybe you heard about Tuesday night’s public hearing on this issue, when hundreds of opponents of elimination organized by Iowans for Tax Relief caused a booing, hissing ruckus and were removed by state troopers under orders from Democratic House Speaker Pat Murphy. Obscenities were hurled, according to media reports, and Iowans for Tax Relief leader Ed Failor Jr. was quoted as saying Murphy behaved like a “jackbooted Nazi.” Then he got the boot, too.
I understand politics is rough and tumble. And people have every right to speak their minds, even loudly.
But as I wrote on my blog, this is about a tax deduction. A significant one, sure, but a tax deduction. We’re not seceding from the union. This isn’t the death penalty or a ban on all guns or a plan to raise revenue by selling every third baby born. It’s a tax debate. Troopers and Nazis? It’s painful to watch.
Sure, warped folks like me, bloggers and partisan die-hards thrive on conflict.
But Iowans must look at spectacles like this and wonder whether a three-ring circus can solve any of the problems they care about.
Here’s a secret: It can’t.
So don’t take away federal deductibility. But, please, take a deep breath.