DES MOINES, Iowa – President Donald Trump on Friday afternoon signed the $2 Trillion stimulus package called the CARES Act passed by Congress after several days of negotiation.
Single adults who earn less than $75,000 annually will receive $1200. Married couples earning less than $150,000 will receive $2400. Families who have children under the age of 16 will receive an additional $500 per child. Those who earn more than those amounts will receive less based on their income, and single adults who earn more than $99,000 and married couples who make $198,000 will not receive a stimulus check.
Currently, under Iowa law, the state will tax that stimulus check as income.
State Senator Jake Chapman, R-Adel, chairman of the Iowa Senate Ways and Means Committee, is drafting a bill to make those stimulus checks exempt from Iowa income tax.
“I have advocated that Iowa should eliminate the income tax,” Chapman told Caffeinated Thoughts on Friday afternoon.
“I want to allow Iowans to use that full refund or that stimulus check to spur economic activity. And I think it’s a great reminder to Iowans why we should be moving towards the total elimination of income tax here in the state of Iowa,” he added.
Chapman said that he has not brought up the idea with the entire Senate Republican caucus, members who have seen this proposal he said were generally supportive.
When the Iowa Legislature gavels back in after suspending their session, they may find themselves rushed for time with shifting priorities.
“When we do return, there’s going to be a number of conversations about what we do here in Iowa to help, particularly our small businesses and Iowans who have been impacted by COVID-19,” Chapman said.
“And I think this will be just one small measure that we could certainly do that I think absolutely makes sense. And just from the pure policy of this, individuals are not going to have withholdings, on this portion where typically when individuals are working for an employer, they’re having withholdings on their income. So they’re not stuck with a big tax bill. I really think it would send the wrong message for us to say, we’re going to use money that was intended for you to spend, and we’re going to take a portion of that to prop up state government,” he added.
Chapman informed Caffeinated Thoughts that the Iowa Department of Revenue is reviewing the language of the CARES Act to see if a bill is necessary.
“Either way, we need to make sure it’s not taxed,” he said.
In terms of additional stimulus that the state could provide, Chapman said the Legislature should consider the $250 million in the taxpayer trust fund. He said that fund reflects revenue that comes in that exceeds revenue estimates and the state’s budget formula.
“So we should be giving that back to the taxpayers. I was talking about this before COVID-19 hit when we first came into session saying we need to find ways to give that money back to the taxpayers that belongs to them. And so I thought it would be a real shame to see government raid that account for government use and purposes,” he added.