Tax Revolt in Iowa

Dem majority orders ordinarily mild-mannered Iowans out of the state house during a public hearing. Hundreds were protesting a major change in income tax law:

The proposal, House File 807 and Senate Study Bill 1317, would end a practice known as federal deductibility. That means Iowans could no longer subtract what they pay in federal income taxes from their income when figuring their state taxes

.News video here. Iowans for Tax Relief ad:Related:WSJ, "States Try to Tap High Earners":

The governor and Democratic lawmakers in New York will attempt to patch an $18 billion budget deficit by imposing much higher taxes on the richest residents, joining several states considering such a move this year.

Under a proposal by Gov. David Paterson, New York would follow California and Maryland in pushing its top earners into higher tax brackets that are several percentage points more than what most earners pay. And New Jersey is considering raising its top-tier income taxes even higher, to more than 10% compared with the 5.25% marginal rate paid by most households. [snip]

Critics say the planned increase wouldn't hit just those in the financial industry. Small-business owners in New York are especially piqued, business groups say. Many report their business earnings on their personal income-tax returns and fear the additional tax load will constrict their enterprises. "You eliminate their ability to hire new employees, buy equipment, finance an expansion," said Mike Elmendorf, state director of the National Federation of Independent Businesses.

A 2008 analysis by the libertarian Cato Institute found that higher taxes suppressed economic growth and that locales that imposed an income tax to generate revenue had poorer growth rates than places that chose alternative taxes.

Chicago's Mayor Daley criticizes fellow Dem Gov. Pat Quinn's proposed budget. Crain's:

Chicago Mayor Richard Daley says Gov. Pat Quinn needs to offer some relief to Illinois homeowners if he wants to raise their income taxes.

Daley told reporters Tuesday that any income tax increase should be accompanied by property tax relief.

Quinn has proposed a 50 percent bump in the income tax rate as part of his plan to fix the state's $11.5 billion budget deficit.