Iowa State Director Matt Everson, along with John Hendrickson, policy director for Iowans for Tax Relief, penned an Opinion Piece that ran in the Corridor Business Journal supporting Governor Reynold’s fiscal policy.
You can visit the Corridor Business Journal here or read a copy of the op-ed below.
The May 2024 NFIB Small Business Economic Trends Survey demonstrated that not only are small business owners pessimistic about the economy, but also worried about tax and regulatory policy. The survey reflects the growing concerns that many Iowans have as they struggle with the economic uncertainty caused by high inflation. The pessimism and economic anxiety are a direct result of the failed fiscal policies of President Joe Biden. In Iowa, Governor Kim Reynolds and the Iowa Legislature are charting a different economic policy course that is based on providing tax relief, reducing regulations, and limiting government.
This session, lawmakers delivered a significant income tax cut, which accelerates the implementation of the flat tax starting in 2025. Iowa will have a flat 3.8% flat tax, the sixth lowest income tax rate in the nation.
A 3.8% flat tax will benefit all taxpayers. “Beginning January 1, 2025, Iowa families will save an average of $800 on their state income taxes. Total money remaining in the hands of working families is $1.3 billion,” stated Senate Majority Leader Jack Whitver. This is real savings for taxpayers, including small business owners who pay income taxes through the individual tax code.
Since 2018, thanks to Governor Reynolds and legislative leaders, Iowa has made tremendous progress in reducing and simplifying income tax rates. With a top income tax rate of close to 9% and a 12% corporate rate, Iowa once had some of the highest rates in the nation.
Additionally, the Legislature advanced two taxpayer protections. The first would require a two-thirds majority vote of both houses of the Legislature to increase the income tax rate. Several states, including progressive states like California, have supermajority requirements to raise taxes.
The second resolution would constitutionally protect the flat tax or a single-rate income tax prohibiting a future Legislature from reinstating a progressive multi-tax rate system. It would also prevent a future Legislature from creating a “wealth” tax, which would especially punish small business owners. The real reason critics oppose these resolutions is that it not only makes it more difficult to raise taxes, but it also will force future Legislatures to control spending. Both the two-thirds supermajority requirement and protecting the flat tax are both crucial taxpayer protections.
Both resolutions will need to be passed by the Legislature during the next legislative session for them to appear on the November 2026 ballot. Both proposed constitutional amendments are important taxpayer protections and help to ensure that Iowa’s tax code remains competitive.
Further, the Legislature continued its efforts to reform state government by reducing and consolidating state boards and commissions and strengthening the process to review and provide oversight of regulations.
The real economic threat to individuals, families, and small businesses in Iowa is not from the fiscal conservative polices of Governor Reynolds, but rather the failed policies from the Biden administration.
Iowa’s fiscal house is on a strong foundation as a result of conservative budgeting. For the past several years the budget has been in surplus, the reserve accounts are full, and the Taxpayer Relief Fund has a $3.7 billion balance. How much better would Iowa be doing if the nation were not subject to the devastating impact of high inflation caused by reckless federal spending?
Further, if spending and tax increases are key to economic growth, then why are progressive states such as California, Illinois, and Minnesota experiencing fiscal problems?
President Biden is creating pessimism and uncertainty with inflation and the failure to make permanent or renew the Tax Cuts and Jobs Act. Failure to do so, will result in a substantial tax increase on all Iowans, but Governor Reynolds is providing stability by enacting policies that encourage economic growth and productivity.
