Common Good Iowa

A quarter-century of cutting taxes for the wealthy has not made life better for most Iowans

Posted on August 31, 2023 at 5:42 PM by Anne Discher

This piece is adapted from remarks Common Good Iowa executive director Anne Discher made to the Iowa AFL-CIO convention in Altoona on August 24, 2023. 

I want to give you a way to think about a policy discussion we all need to be a part of — and to influence — when state lawmakers show back up at the state Capitol next January.

It’s tax policy. Exciting, right? Well, it is when we understand the stakes.

What’s coming down the pike are proposals to eliminate the state personal income tax. They come with a cynical messaging game, and I want you to understand it. I want you to know that when people promote draconian tax cuts like these, they are doubling down on an agenda to fill the pockets of the wealthiest Iowans at the expense of working people.

They want to convince you that expanding opportunities for our state’s children, families and workers is just too expensive — that we are so strapped that if you win, it means I must lose.

I’m asking you to challenge this idea of scarcity. It is false premise promoted by those in power for the purposes, largely, of staying in power:

  • By making us anxious, they can keep us focused on immediate crises and away from long-term, sustainable solutions for our state.

  • By keeping us in competition with each other, they can divide and conquer.

  • By implying, wrongly, that we can’t afford them, they can pit services against one another. They might claim, for instance, that it’s programs like SNAP and Medicaid — and not spending on tax cuts — that "are putting pressure on us being able to fund other priorities," as the House Speaker said in January.

Then can they turn around and appeal to our worst impulses, to point the finger for our hard times at the folks with the least power: poor families, Black and brown people, new immigrants.

Here’s the truth. We live in times of abundance. We have the resources we need to meet our needs. But we might not think so, because our leaders don’t want us to.

For a quarter of a century, Iowa lawmakers have been chopping away at the state income tax. They’ve been giving the biggest breaks to the wealthiest Iowans at the expense of our common needs and aspirations. For much of that time, the cuts have been slow and steady, and much like the frog in boiling water, we’ve not always noticed the rising heat.

But tax cuts are choices. Like all choices, they have tradeoffs. We can spend either on tax breaks or on services that promote the common good. By prioritizing tax cuts, we preclude investments that make Iowa a better place to live, work and raise a family.

And so here we sit. Today:

  • One in 7 Iowa families with a full-time worker — over 100,000 families — do not earn enough to get by on their own because we fail to invest in good jobs and living wages.

  • One in 7 Iowa workers — 250,000 of them — have their wages stolen by their employers because we rarely investigate, much less penalize, this crime.

  • Our schools are stretched, and teachers are stressed, because for years we have funded them at levels below inflation and true costs. (And that’s before we started diverting public dollars from our public schools — schools with a responsibility to serve all students, no matter their race, religion, income, disability status, sexual orientation or gender identity — to private schools with a license to discriminate.)

  • We have dirty water — and state beaches where often you can’t let your kids swim — because we let polluters pollute with virtually no consequences. 

  • Our nursing homes, hospitals and child care centers are stretched, and, in many rural communities, struggle to keep their doors open because we fail to adequately invest in health care and child care. Sometimes they fail.

Iowans see these challenges. And yet so many of our elected leaders turn away from them, instead ramping up plans to hand tax breaks to the rich and cut services for the rest of us.

Lawmakers have already approved income tax breaks that within a few years will cut the state budget by 20%. And Gov. Reynolds says she wants to fully eliminate the personal income tax by the end of her term. She has allies in the legislature who already have introduced bills. Votes could come as soon as January. The frog is gonna feel that for sure.

Who would benefit from cuts like these? Yep, overwhelmingly the wealthiest people in our state. People in the top 1% would see an average tax cut of over $60,000 a year! People earning in the bottom 20% of incomes, on the other hand? They would see an average tax cut of $22.

And the tradeoffs. The personal income tax currently generates HALF of the state budget. HALF. Let’s think through that. Let’s think about education, which makes up a little over half the state budget, the vast majority going to PK-12.

How much would you have to cut from public schools to cut the state budget in half? How big are we willing to let classes get? How many small districts are we willing to put out of business? How long are we willing to make students ride the bus? How few extracurriculars is too few?

Now, lawmakers promoting these devastating tax cuts understand perfectly that the answers to these questions won’t be popular.

They know that Iowans don’t want to see catastrophic cuts to their schools. Nor do they want to slash Medicaid, which insures 40% of children and half of nursing home residents and helps people with disabilities get care in their homes and communities.

They do want the state to crack down on wage theft. They want clean water. They want families to afford child care, and for child care centers to pay their workers a living wage.

The people promoting these draconian tax cuts know they can succeed when they separate the tax cuts from the budget cuts that result. That’s why they phase in the cuts to hit years after they pass them. The tax cuts passed in 2022 won’t be fully apparent until 2028. Any new cuts passed next year would show up even later.

We need to stop making bad decisions now.

A quarter-century of cutting taxes for the wealthy has not made life better for most Iowans. Doing more of the same will not produce a different result.

So here’s my appeal to you. Every time you hear about plans to cut taxes — and no mention of the tradeoffs such cuts require — remember their game. They are pitting us against each other under the guise of scarcity and austerity, while they disproportionately privilege the already privileged few.

We need people from every corner of our state to stand up now for our aspirations for our families and communities, just like fights in the past for better wages, safer workplaces and civil rights. We can win this!

Categories: Budget & taxes

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