As Iowa lawmakers head into the final stages of this legislative session, Iowans must remember our state’s fundamental fiscal challenges. We need a balanced approach that assures fiscal prudence and adequate revenues to meet our citizens’ needs. This is no time to be cutting taxes. We cannot afford it.
The Governor’s approval last week of a “Taxpayers Trust Fund” only makes our challenges greater. The legislation creates a $60 million pool to pay for tax cuts. We fear it might become a slush fund for big giveaways to corporations and the wealthy.
In the same legislation, the Governor item-vetoed two other tax policy provisions — one, a wasteful business giveaway known as “bonus depreciation,” and the other, a much-needed boost in the Earned Income Tax Credit for low- and moderate-income working families. In any comprehensive tax reform, boosting the EITC would be a good start.
In his veto letter, the Governor acknowledged that a state bonus depreciation break has little or no stimulative effect on the economy. This is a welcome perspective from the Governor — and lawmakers should recognize as well that many proposed tax giveaways for business suffer from the same deficiency.
At the same time, they should recognize the state EITC does have a stimulative effect on the economy. Working families who earn little in their jobs would see their taxes cut. Their spending churns over in local stores and activities and also helps the economy.
Any tax policy changes in the final days of the legislative session should improve the revenue side of the ledger after devastating budget cuts of recent years. Tax changes should improve tax fairness while helping the economy. All proposals on the table to slash corporate income taxes and individual taxes for the very wealthy are unwise.
The Iowa Fiscal Partnership is a joint budget and tax policy initiative of two nonpartisan, Iowa-based organizations, the Iowa Policy Project in Iowa City and the Child & Family Policy Center in Des Moines. Find IFP on the web at www.iowafiscal.org.