Iowa State Capitol

Constitutional amendment aims to protect rich taxpayers

by Peter Fisher

[Previously published as a guest opinion in the Cedar Rapids Gazette]

This is a scam alert. We’ve all learned to be wary of schemes promising to save us thousands of dollars but designed instead to drain our bank account. Well there is a new one coming on Election Day in November in the form of a proposed amendment to the Iowa Constitution.

The past decade of Republican rule has been a story of one tax cut after another shoveling millions in benefits to the richest Iowans while tossing pennies to the rest of us. The most recent cuts promised the average millionaire household about $23,500 in savings but gave the bottom two-thirds of tax filers an average of only about $100.

That strategy has led to huge revenue losses. Schools and other services have been forced to retrench as state funding fails to keep up with rising costs. And yet the budget is still not balanced. The annual budget deficit exceeded $1.2 billion last year and is projected to do so again this year. .

The tax-cutting binge has been financed largely by eating up our savings. From 2021 to 2024 the state accumulated large budget surpluses, thanks to federal pandemic relief, but we started devouring those surpluses, and they will soon be gone. Revenues no longer keep up with what Iowans want and need from their state.

The Legislature has chosen not to fix the budget imbalance but instead to try to lock in all those tax cuts to corporations and the wealthy. Republicans have put a constitutional amendment on the ballot requiring a supermajority to pass any law that increases individual or corporate income taxes: Two-thirds of both the House and the Senate would have to approve such a measure, making it virtually impossible to pass.

This amendment would ensure that we can’t finance public schools or health care or childcare by any measure that would make the rich pay their fair share of costs. We couldn’t restore a higher tax bracket on top incomes or enact a millionaire tax as some states have done, or close a loophole that corporations exploit. Call it “The Millionaire Protection Act.”

Future legislatures would be left with only two choices: Enact massive cuts in education and other services, or adopt a huge increase in the sales tax, making goods and services even more unaffordable in working family budgets. To cover continued revenue shortfalls the sales tax would have to rise to nearly 9 cents on the dollar including the local option portion.

Guess who pays the biggest share of their income in sales taxes? The lowest income Iowans pay about 6 percent of their income in sales and excise taxes, the top incomes only 1 or 2 percent. So don’t be fooled. A vote for this amendment is not a vote to keep your taxes down. It is a vote to preserve tax cuts for the richest and force higher taxes on the rest of us.

Peter Fisher is a retired professor of Urban and Regional Planning at the University of Iowa where he taught state and local government finance.