It is time for Iowa to go back to the drawing board for responsible and meaningful tax reform.
Any serious analysis shows the Legislature in 2018 failed to reform taxes in a fair and accountable manner that assures better funding for education and other Iowa priorities.
True tax reform would have reined in Iowa’s rapidly growing and unaccountable tax credits for corporations, many of which do not pay any Iowa income tax. It would have addressed corporate tax loopholes that cost Iowa a conservatively estimated $100 million a year.
Instead, the new tax plan abandons real tax reform for new, costly changes slanted heavily to the rich. This is evident from the official estimates of the Legislature's own fiscal analysts.
Contrary to the claims of Rep. Peter Cownie in the July 11 Quad-City Times, the 2018 tax legislation was historic only in the sense that it undercuts by more than any bill in memory the ability of the state of Iowa to do the citizens' business. It is far more likely to hurt the Iowa economy than to help it, as similar tax-cutting in Kansas has done.
You have free articles remaining.
The package had one true benefit: modernizing the sales tax to include online purchases and level the playing field for local and state-based businesses.
Other than that, it is a gift to the wealthy that compounds an already severe imbalance in who pays for Iowa services. Iowans in the middle will see income tax cuts of $100 to $300 over the next four years, but a lot of that will go back in increased sales taxes of $35 to $60.
The tax deal for the wealthy comes at a high cost to the state — more than $400 million a year by 2021.
It is true that the wealthiest do pretty well: In 2021, almost half of the tax cuts will go to the richest 2.5 percent of Iowa taxpayers, those making $250,000 or more. And millionaires will see a $24,000 tax cut that they don't need. We all pay for that, and so do our kids.
If legislators had truly been proud of the work, and wanted people to see it, they would have built the legislation through an open committee process with full and timely public hearings. Instead, this was a backroom boondoggle that will saddle Iowa with fiscal problems for years unless corrected quickly.
Legislators did not receive any fiscal analysis of the bill until the final day of the extended legislative session, unless they were privy to the back-room dealing. Like the rest of us, even most legislators were left out of the discussion on — let alone the crafting of — the bill.
Fitting, perhaps, because most of us are left out of the benefits of this legislation.
Fisher is research director of Iowa Policy Project in Iowa City, a left-leaning think tank based in Iowa City, and an emeritus professor of economics at University of Iowa.