Iowa, Nebraska, and Arkansas Legislators Gear Up for Income Tax Cuts

In 2014 the Missouri Legislature passed a modest income tax reduction which, given its size, by no means solved the state’s tax competitiveness problems. That fact is reaffirmed by the news we’re now hearing from some of Missouri’s neighbors. For instance, in Iowa—where state lawmakers cut taxes as recently as 2013—the income tax reform movement is getting bipartisan support.

State Rep. Tom Sands, R-Wapello, chairman of the tax-writing House Ways and Means Committee, said his preference would be to examine corporate and individual income taxes while exploring ways to simplify the tax system. Senate Majority Leader Michael Gronstal, D-Council Bluffs, said any tax cuts should be focused on helping middle-class Iowans.

“We will most definitely be looking at income tax reform, making the tax code flatter and simpler,” Sands said.

Sands added he hopes lawmakers will offer “substantial and meaningful tax cuts,” although he explained it’s too early to provide a specific dollar estimate because of uncertainties over state revenue.

Iowa is not the only border state looking to make income tax changes. In neighboring Nebraska, legislators (with the help of the Platte Institute) are exploring a round of tax cuts of their own that would also chop the state’s tax on incomes. On Missouri’s southern border, Arkansas is looking to cut its income taxes too, in part by getting the state’s tax exemption culture under control.

“They’re important to you; therefore, they’re important to me,” [Governor-elect Asa] Hutchinson told the [farming] group. “But we are now reaching a point in Arkansas that we need to look beyond more and more exemptions to our tax structure, and we need to look at an across-the-board reduction of our state income tax.”

Missouri lawmakers deserved applause for finally getting a tax cut across the finish line in 2014, but as we said at the time, that small cut alone is not enough to get the state on a firm, competitive footing for the years ahead—precisely because other states in the region weren’t going to stand still on tax relief. News out of Iowa, Nebraska, and Arkansas confirm this.

And make no mistake: The support for tax cuts has never been greater in the Missouri Legislature than it will be in 2015. Legislative leaders should not sit on their hands and let the opportunity pass them by. Our neighbors certainly aren’t.