Connecting the Dots: Tax Breaks and School Funding

Over the last two decades, Iowa has been consistently underfunding education and other critical state priorities. Iowa’s legislature has typically cited limited revenue growth projections to justify this behavior. However, the root cause of this issue is mostly self-inflicted, caused by the state’s affinity for tax cuts. Business tax breaks have been draining $275 million from the state treasury, which is far more than the general fund’s growth in spending overall. This trend has continued, with the cost of these tax credits increasing by 267% since 2007, with the six largest credits accounting for 87% of the total. Caps on individual credits and groups of credits have done little to slow growth.

The commercial and industrial property tax bill passed in 2013 has also contributed significantly to the issue, cutting $268 million in funds available for education and other important priorities. Assuming the property tax estimate holds, the total cost of these business tax breaks will drain about $579 million in revenue from the state general fund this fiscal year. Despite these tax breaks, Iowa’s business taxes are already highly competitive. It is unlikely that large cuts in state taxes will influence business investment and location decisions. The increase in tax incentives and business tax cuts has resulted in several hundred million dollars being cut from the state budget each year. This has weakened the state’s ability to support quality education, from preschool to public colleges and universities. This, in turn, can lead to significant consequences for the state’s economic growth and prosperity.

The Iowa legislature must recognize the root cause of this issue and take steps to address it. Instead of prioritizing tax cuts for businesses, the state should focus on funding crucial public investments like education and infrastructure. This will require making tough choices and prioritizing long-term investment in the state’s future over short-term political gain.

Iowa has a rich history of valuing education and investing in its future. However, current trends have undermined the state’s ability to continue this legacy. It is time for Iowa to reverse course and prioritize funding for education and other essential priorities instead of continuing to prioritize tax cuts for businesses. These tax cuts are unlikely to have significant economic impacts. Only by prioritizing funding for education and other critical priorities can Iowa ensure a strong and prosperous future for its citizens.

It is essential to emphasize that education is one of the most critical investments a state can make in its future. Quality education has a significant impact on a state’s economic development and the well-being of its citizens. A well-educated workforce is essential for attracting and retaining businesses, creating job opportunities, and boosting economic growth. It also helps to reduce crime rates and poverty, leading to better health outcomes and higher quality of life for citizens.

The cost of underfunding education can be high, both in the short and long term. In the short term, there may be cuts to essential programs and resources, such as technology and textbooks. In the long term, underfunding can lead to inadequate teacher pay, teacher shortages, and outdated curriculums. It can also limit opportunities for students, leading to lower test scores and lower college attendance rates.

In conclusion, Iowa’s chronic underfunding of education and other important priorities is mostly due to the trend of tax cuts over the past two decades. It is crucial for the state to acknowledge the root cause of this problem and take action to address it. Prioritizing public investments like education and infrastructure over short-term tax cuts will require making difficult choices. However, it is necessary to ensure a strong and prosperous future for Iowa’s citizens. Quality education is essential for the state’s economic development and the well-being of its citizens.

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