Watching the stars from the deck of the Titanic

170118_capitol_170603-4x4The people who will lead the charge against fairly derived and only fairly adequate revenues have been giving folks a taste of what’s coming in Iowa tax policy in 2018.

If you like the current debate in Washington over tax cuts that benefit the wealthy at the expense of services for the vulnerable or investments in opportunity for all, you’ll love the coming debate in Des Moines.

Yet, the language of opening shots already is fascinating.

A Titanic analogy is apt.

Senate Majority Leader Bill Dix says the debate will be about “relief,” not “reform.” “Reform implies that it might be a moving of chairs on the deck and that’s not what we should be pursuing.”

His reference is a familiar nod to the idea of “moving the deck chairs on the Titanic,” a fruitless activity, ironically apt for the agenda he is pursuing — an agenda that includes the radical and fiscally incompetent notion of eventually eliminating the state income tax. What dooms prosperity for the state of Iowa is continuing to fail to invest adequately in the key drivers of the economy where state policy can have an effective impact. True “reform” would correct that.

In contrast, the stated Dix plan is to reduce reliance on the income tax, which is already less than one-third of state and local revenues. The income tax is the only piece of that structure where low- and moderate-income Iowans pay a smaller share of their sometimes meager income in tax than those in the top 20 percent. The property tax and sales taxes are weighted in favor of the wealthiest.

Tax cuts guarantee lower revenues, a reality noted in the current federal tax debate. Lower revenues also mean fewer or lesser services. Think education. Think health care. Think law enforcement. Think clean water, recreation, and quality of life. These are all Iowa assets driven by public investment, on which private businesses thrive and with which businesses make their decisions on where to locate, unlike taxes.

Whatever they are, they’re not “stars.”

Rep. Jake Highfill says “all the stars have aligned” for tax cuts. Stars are bright and shiny. Dreams are made, courses to achievement are set, upon stars.

What have aligned, rather, are the pieces of brute political power. We have seen this already in 2017. The gutting of public-sector collective bargaining rights and worker’s compensation, and eliminating county minimum wages last session, demonstrated a willingness to use the levers of power on behalf of powerful lobbyists in complete disregard for facts, fair play, open debate and traditions of Iowa governance.

Promises don’t mean much.

Cities and counties were assured the state would “backfill” revenue lost to what then-Governor Branstad and legislators proclaimed as the largest tax cut in Iowa history — the 2013 property tax bill. And for a short time they have, making a huge dent in what state funds are available for the investments noted above.

Slower-than-forecast revenue growth now puts that “backfill” in jeopardy. Highfill said last week he would favor “phasing it out or getting rid of it altogether.

Cities and counties were wary of this from the start. Clearly, they had good reason.

Principled tax policy would assure, among other things, adequate revenue, with taxes paid most by those who can most afford to pay. We don’t have either as it stands. The changes appearing on the horizon would only compound the problems in Iowa’s existing structure, which is heavily weighted toward the wealthy and corporations, and against lower- and middle-income working families.

You’re not likely to have a say in what happens before a plan hatched behind closed doors is dumped on the House or Senate floor, whipped through the chambers and sent to the Governor before everyone goes home to campaign.

Lawmakers won’t want to spend a day longer than their taxpayer subsidy permits this spring.

So, brace yourself. Start by securing your deck chair.

2017-owen5464Mike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

 

Author: iowapolicypoints

The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy. By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.

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