The Iowa Revenue Estimating Conference met Thursday and dropped its revenue estimate for the current fiscal year by $127 million.
The REC estimate projects Iowa to have lower receipts in the current year than in the budget year that ended June 30, by $2.5 million.
A common-sense approach to budgeting would leave one clear message above all others: Drop the talk about tax cuts. We cannot afford any more of them, and we need to double down on a focus on reining in the giveaways that are already on the books, running automatically outside the budget process.
- Tax credits for business, when including the property tax credits from the 2013 commercial property tax giveaway bill, have more than doubled in just five years.
- We leave tax loopholes unplugged at an annual cost of $60 million to $100 million — estimates by the Department of Revenue.
- Iowa’s taxes on business already rank in the lower part of the middle of the pack nationally, as shown by Ernst & Young in the graph below. This directly contradicts the illusion painted by apologists for even lower taxes on business and more corporate welfare at the expense of lower- and middle-income working families.
Corporations are not people; they are tools designed for the purpose of making profit. Some of their activities can serve a greater good, but this is not automatic. They will seek and take new tax breaks if allowed, no matter the longer-term cost to services that support a level playing field for business and greater opportunity and health for all.
Budget choices, on the other hand, reflect a moral purpose — choices that advance values we share as members of our various communities, our state and our nation.
Through that lens of Iowa values, and the added context of tight revenues due largely to reckless and unaccountable giveaways, and the reality that tax breaks don’t pay off in greater revenues under even tortured economic analysis, it is impossible to suggest that new tax breaks make sense.
There are approaches to tax reform that make sense. They start with principles that put fairness, public benefit and adequate revenues ahead of political power brokers.
Mike Owen, Executive Director of the Iowa Policy Project