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Iowa stacks taxes against middle, low-income Iowans Study: New state tax law reinforces long-term trend of regressive taxes Iowa summary sheet (PDF) IOWA CITY, Iowa (Oct. 17, 2018) — Iowa taxes its middle- and low-income families more as a share Read more

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 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.

Real tax reform would eliminate wasteful spending on tax breaks, transform a regressive system into one that fairly reflects ability to pay, and assure a stable revenues to fund education and other critical services.

Odd that Governor Branstad, burned so early in his tenure by overly rosy revenue estimates, would let this happen to his very own lieutenant governor as she took office.

“The precedents being set raise uncertainties for the future governance of our state.”

Aside from fiscal impacts, sales-tax proposals and actions in Iowa ignore existing law or voters’ directives, and long traditions in the way we govern ourselves.

Economic benefits would result — perhaps more — if the penny sales tax dedicated to school infrastructure spending were not diverted, as the Governor proposes, to other purposes.

“Too often, we see public officials relying on these rankings and the policy prescriptions they promote, when in fact the rankings have no predictive value for economic growth,” said Fisher.