Extreme tax plans are wrong for Iowa

March 2024 | View PDF

The income tax is one way we lay the foundation for widespread opportunity in our state. Proposals at the Iowa Capitol would speed up and deepen big personal income-tax cuts passed in 2022. The most extreme plans would eliminate the tax altogether. These plans take Iowa the wrong direction:

Income-tax cuts will blow a hole in the state budget

• The personal income tax generates nearly half the state budget. Slashing the income tax will demand painful — and unpopular — cuts to services that help Iowans thrive: everything from local public schools and mental and maternal health care to state parks and trails.

• Although Iowa has a temporary budget surplus lawmakers can use to paper over damage to services in the short term, surpluses are one-time dollars. When they’re gone, they’re gone.

• Tax-cut proponents are denying what we all know: You can’t get something for nothing.

Income-tax cuts rig the system against working Iowans

• Income-tax cuts are a giveaway to the richest Iowans. Under the Governor’s plan, for example, the top 1% of earners would get an average cut of $22,000. People in the bottom 20% would get an average cut of $7.

• Even now, low- and middle-income Iowans pay a higher share of their incomes in total state and local taxes (income, sales and property) than richer neighbors. More cuts to the income tax, our only tax based on the ability to pay, would make the imbalance worse.

Constitutional amendment would lock in breaks for wealthy

• A proposed amendment would tie the hands of future lawmakers, keeping them from setting income-tax rates based on the ability to pay. By requiring a single, or flat, rate, it would force middle-class and poor families to shoulder much more of the load for our shared responsibilities.

• Another version of the amendment would further cement inequity by requiring a 2/3 majority for income-tax increases — handing veto power over undoing budget damage to as few as 17 lawmakers and increasing pressure to increase sales and property taxes.

Bottom line: Reckless tax cuts run counter to Iowa’s tradition of common-sense policymaking to promote widespread opportunity for all Iowans. We urge lawmakers to reject them.