Guest opinion: Iowans will hate what tax cuts bring

By Mike Owen, Common Good Iowa

As published in The Gazette, Cedar Rapids, Nov. 26, 2023

Iowans are going to hate it.

They are going to hate the crowded classrooms, loss of exceptional teachers, and ballooning college tuition. They will hate it when friends and family lose health coverage, their local hospitals slash services or close altogether, and the state does even less to protect our air and water.

They’re also going to hate they were not told the hard truth about tax cuts by the people promoting them, including Gov. Kim Reynolds.

The truth is tax cuts lead to service cuts. Proponents may be able to postpone the pain by phasing cuts in slowly or filling in with one-time dollars, but time catches up.

Iowa's expensive and reckless tax cut agenda for the wealthy — cuts passed but not yet implemented, and cuts on the agenda for the next legislative session — will save little for the vast majority of Iowans. But the services to meet our common needs and aspirations will be harmed. There can be no doubt.

The reality is that an Iowa governor in 2027 will be proposing a budget with 20% fewer dollars than Reynolds had to work with in 2022. That’s when she signed big tax cuts, mostly income-tax cuts skewed to the wealthiest Iowans.

She has yet to acknowledge that half of the budget — that is, half of all state services — will eventually be gone if legislators approve her next move, to eliminate the personal income tax. That would send 63% of the benefit to the top 20% of income earners.

Yet she insists Iowans are “going to be very happy,” as The Gazette reported in Tuesday’s paper.

Here's the reality:

• We have big state surpluses because the federal government boosted the Iowa economy with billions of COVID recovery dollars, and state lawmakers for many years suppressed investments in education and other services.

• Few of the new tax cuts have taken effect yet so Iowans haven’t seen the impacts. The 2022 tax bill phases in through 2027, taking massively bigger chunks of revenue each year. State fiscal analysts have made projections. The governor and Republican leaders don’t talk about them.

• Majority lawmakers are literally budgeting for tax cuts instead of schools, health care and public safety. Nearly $800 million from this year’s revenues are being siphoned away from services and into the Taxpayer Relief Fund, which will be over $3.5 billion by next July and is earmarked for tax cuts.

Iowa’s surpluses represent the abdication of community responsibility that Iowans have historically met. Education is a good example. Sen. Herman Quirmbach, an economist, attributes almost one-third of the projected $2.1 billion surplus for FY 2024 to a $685.6 million shortfall in funding PK-12, regents and community colleges below inflation.

As remarkable as that daunting number is the fact that while one state senator is doing the math, legislative leaders and the governor avoid analysis that exposes how surpluses and tax cuts punish public education, among many targets.

By the end of the decade, maybe sooner, Iowans will see a totally different landscape.

Iowans will realize they’ve been hoodwinked, that the tax cuts failed to deliver — as they always do. They’ll see crowded classrooms, closed hospitals and dirty water. Their children? Gone to high-road states offering opportunity to chase their dreams, not just a few bucks.

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Mike Owen is deputy director of Common Good Iowa. mowen@commongoodiowa.org