Common Good Iowa

Taxes connect pieces of a bright agenda for Iowa

Posted on January 8, 2024 at 3:53 PM by Anne Discher

It’s the start of a new legislative session and many people committed to a brighter future for Iowa are talking about their priorities.

One issue ties them together: a fair and sustainable tax system.

The taxes we raise — and the budgets they fund — are how Iowans come together to lay strong foundations that create opportunity and help people thrive.

After already passing drastic tax cuts, Governor Reynolds and legislative leaders want to eliminate Iowa’s personal income tax. Regardless of how they spin it — and they will spin it — please know that pushing to eliminate the income tax is a virtual promise to decimate the services that make Iowa a good place to live, work and raise a family.

First, let’s be clear: eliminating the personal income tax would overwhelmingly benefit the wealthiest Iowans.

People in the top 1% — making an average of $1.5 million — would get an average cut of about $60,000, or $5,000 a month.

People in the lowest 20% — making on average $17,000 a year — would see an average cut of just $45, or less than $4 a month.

That’s unfair on several levels, but an important one is this: Low-income Iowans already pay a higher share of their incomes in total state and local taxes — that’s income, property and sales — than their higher-income neighbors. Income-tax cuts make that imbalance even worse.

Second, eliminating the income tax would blow a massive hole in our state budget.

The personal income tax currently generates about HALF of the state budget. HALF. Imagine half of all state services gone.

If we eliminate the income tax, a middle-income Iowan making around $70,000 a year would see modest tax cuts — about $120 a month. But what would they get in exchange? Well, just to start —

  • Bigger class sizes and fewer academic options in their kids’ schools.
  • Bigger college tuition bills
  • Even fewer mental health resources to tap in times of crisis
  • More local traffic deaths as fewer state troopers patrol our highways

These aren’t great tradeoffs.

Now, lawmakers promoting these radical tax cuts understand perfectly that those tradeoffs won’t be popular. They will deny the basic math of the situation and push out implementation of the cuts for a few years, as they have done before, so they don’t have to talk about the tradeoffs they are forcing. In short, they will be able to run for office on the tax cuts, but leave the tough work of eliminating services people care about for someone else to make.

There is a better way forward.

Instead of doing a tax giveaway skewed to the wealthy, we can live up to our traditional Iowa values. We can do big things.

  • We can adequately fund our schools and pay our teachers to reflect their skills and commitment.
  • We can invest in all Iowa workers — expand apprenticeships, make community colleges and state universities more affordable and invest in child care.
  • We can make sure Iowans can get the care health care they need — physical and mental — no matter where they live.
  • We can establish a state Child Tax Credit to reduce child poverty and help families pay for essentials like food, utilities and diapers.
  • We can give every child free school breakfast and lunch.

Certainly those who care are aware of our current political constraints.

But we need to start painting a powerful alternative vision. People from every corner of our state must stand up now for our aspirations for our families and communities, just like we did in the past, in fights for better wages, safer workplaces and civil rights.

Let’s start today.  


Anne Discher is executive director of Common Good Iowa.

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