Chamber Alliance opposed to Democrats’ plan

The Iowa Chamber Alliance (comprised of the 16 largest chambers of commerce in the state) doesn't like the state tax break that folks around the statehouse call "federal deductibility." It allows Iowans to deduct their federal income tax bill from their income before they start calculating their state income taxes. Many economic development officials and business types say the tax break makes the top Iowa income tax rate look artificially high and uncompetitive compared to other states. During a news conference in December, the Chamber Alliance argued the tax break (federal deductibility) creates confusion since Iowa is only one of four states which offer it. 

This morning, Democrats in the legislature proposed doing away with this tax break and reducing the top income tax rate down to just under 7 percent (it's just under 9 percent now).  The Democrats' proposal would reduce taxes for most Iowans who earn less than $125,000 annually; they say two-thirds of Iowans will either get a tax break or will wind up paying the same level of taxes under their plan.  The Democrats also propose enhanced tax credits for children so Iowa parents (Democrats use the phrase "working families") will get another tax break.  (Sorry, single Iowans.  Nothing special for you.)

Here's the Radio Iowa story filed at 11:52 a.m.  Since the Chamber Alliance in December declared their dislike of the "federal deductibility" tax break because it creates confusion when Iowa's taxes are compared with other states, I included a sentence in the story mentioning the Chamber Alliance supports getting rid of this tax break. 

Now, at 7:05 p.m., Iowa Chamber Alliance executive director Dave Roederer sends me this statement, via email: "Our position is that if (federal deductibility is) eliminated every cent should go to lowering every tax payers income tax. We are opposed to the announced proposal raising taxes on over 80,000. Income tax reform is a priority of ours, but this does not reach the level of reform."

Roederer's name may be familiar.  He was a longtime member of former Governor Terry Branstad's staff  (Yep, that would be the Terry Branstad who proposed getting rid of this tax break in 1986, but lost that battle.) Roederer was the chairman of George W. Bush's 2004 re-election campaign in Iowa. In the 2008 cycle, Roederer was among the first to back John McCain and he stayed with McCain throughout the entire campaign, ultimately serving as McCain's state chairman for the general election. (Readers of The Blog may recognize Roederer for his bursts of humor during the 2008 Republican National Convention.)