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The Earned Income Tax Credit (EITC) promotes and rewards work in the state of Iowa.

Questions for Iowa before adopting the pass-through loophole need answers: Costs of $100 million-plus, benefits to wealthy — some vs. others at the same income.

Do these highly profitable companies need state subsidies? Would Iowa legislators choose these subsidies over funding for education, human services and public safety?

Seniors are least likely to live in poverty and most likely to have substantial wealth, but legislators keep looking for ways to cut their taxes.

While sales tax has remained important to state and local revenues, tax policy in Iowa has not kept up with changes in the economy, particularly with online and remote sales. The Governor’s tax plan would modernize that element — but other changes could ease Iowa’s overall regressive tax structure.

The proposed expansion of Iowa’s 529 program adds administrative complexity, reduces revenue for other needs, and disproportionately benefits high-income families.

The plan includes some desirable reforms that need not have come at the expense of essential public services that inevitably will have to be cut in the face of revenue losses. It also omits reforms that could enhance Iowa tax fairness. 

Governor Kim Reynolds’ tax proposal trades massive cuts in public services for small savings for lower-income taxpayers, larger savings for high-income taxpayers and few meaningful strides toward fairness in a system that already treats the poor poorly and raises too little revenue to avoid mid-year cuts.