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Give tax plans full review

IFP Statement: Give both tax plans full analysis

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IOWA CITY, Iowa (Feb. 21, 2018) — The Iowa Fiscal Partnership today released the following statement from Peter Fisher, research director of the nonpartisan Iowa Policy Project, about the new tax proposal from Iowa Senate Republicans.

A major overhaul of Iowa’s tax system — as proposed eight days ago by the Governor and today by Senate Republicans — may be coming in the few short weeks left of the 2018 legislative session.

Shut out of the process for the many months leading to this point, all Iowans need a place at the table, and lawmakers should want thorough analysis before approving anything.

Both Governor Reynolds and the authors of the Senate bill call for a review of tax credits — a problem of accountable state spending that considerable nonpartisan analysis already has identified. The Department of Revenue already has an entire section of its website devoted to such analysis, and provides evaluation reports on tax credits regularly, including many for review by a legislative interim committee each fall. Perhaps it is instructive that the many reviews already have resulted in little reform and a doubling of tax-credit spending in only five years.

Yet no such extensive analysis is being requested for the major overhaul of Iowa’s tax system that is being proposed. That seems to be the least all Iowans could expect before such a radical change is rushed into law.

Likewise, too little is known about the impacts of either plan to draw full conclusions today. Both plans raise questions, and offer some features that could be beneficial — if the bill assures adequate revenues and enhances the fairness of a system that currently is weighted against low-income Iowans and favors the wealthy.

Neither fairness nor adequate funding of state services appear to be the focus of either bill, but let’s give serious analysis a chance. Both plans promise big cuts in revenue — according to the Senate Republican staff, that plan would cut taxes by $1 billion a year. Would senators vote to do that during the same session in which they are making mid-year budget cuts?

Congress just completed passage of an ideologically driven tax-cut bill that benefits primarily the wealthy, at the expense of services for the most vulnerable. Iowa should be careful with whatever legislation emerges not to repeat the mistake.

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