By David Mansheim
Dorothy could be forgiven for mistaking Iowa for Kansas these days.
The Kansas experiment in trickle down economics is famous for lowering taxes and cutting state expenditures to such an extent that the state nearly ceased to function. Iowa legislative Republicans seem determined to follow the same path off the cliff.
Parkersburg is unable to recruit and hire a new or additional police officer, a prevalent condition all over Iowa. We have such a shortage of correction officers in Iowa that the job is unsafe for those on the job. Iowa is dead last (pun intended) of all fifty states in bridge safety. Iowa used to rank number one in education but after years of underfunding we are now ranked 38th.
So, what is the thinking under the Golden Dome of Wisdom in Des Moines? How do we make Iowa a more desirable place to live and work? Why, tax cuts, of course.
Thanks to a lot of Federal Covid money and niggardly spending, Iowa government has a surplus of over a billion dollars. The Iowa Department of Natural Resources announced today that it is planning to close the park ranger houses in 23 Iowa state parks because we can’t afford the estimated one million dollars in repairs. But instead of spending on needed improvements, our representatives have decided to give the surplus away.
The Republican trifecta controlling the Governor’s office and both houses of the legislature means they can do as they please so they are currently considering three different plans to lower taxes on corporations and the wealthy who will in turn show their gratitude with even more campaign contributions, a true symbiotic relationship.
The Republican leadership argument is that lower taxes will entice more business to Iowa. Yet we can’t find the workers needed for the jobs we have now and businesses consistently do not rate low taxes as a priority when relocating. Quality of life, an educated workforce, infrastructure, and even recreation rank much higher. Low taxes do not benefit us if no one wants to live here.
Three Republican plans involve a so-called “flat tax” or the elimination of state income tax altogether. A flat tax is not simpler; the tax rate chart is only one page; it is the determination of what is income and the multitude of possible credits and adjustments that make taxes complex.
Nor is a flat tax more fair. The Iowa income tax as it stands now is mildly progressive, meaning that CEO’s pay at a higher rate than their secretary. The sales tax is regressive; it is a tax on living expenses. Middle- and lower-income people spend almost all of their money on necessities subject to sales tax but higher-income people spend less as a percent of their income. When Iowa’s overall tax structure is considered, the progressiveness of the income tax makes up for the regressiveness of the sales tax but a flat tax would shift the structure to very regressive.
A flat tax is only fair in the sense that people are treated equally but not equitably. Having the lame run the same footrace as the fleet may be treating people equally but that is not fairness by anyone’s definition. Progressive taxation is Biblical; those to whom much is given, much is required. Regressive taxation is not; it is just letting the fat live off the poor.
Let’s try to learn from the failed Kansas experiment. We don’t need to pee on the electric fence to learn for ourselves.
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This editorial originally appeared in The Gazette on March 2, 2022. David Mansheim is a retired lawyer, educator, and businessman living in Parkersburg.