Because government means “us,” less government means “less us.” It almost always means more corporate interest, not public interest … and … more inequality, injustice, and disparity. Worst of all, it means fewer public services.
Imagine new occupants of a large historic building who decide to do a major remodeling project, and they do not take the time to learn how the building was built and what previous structural changes were done to the building. They tear into this column, that wall, or that beam, without thinking that these are indeed load-bearing walls and beams that keep the building standing.
The remodeling fever we are seeing in Washington and the Statehouse involve trashing all things public: public schools, public services, public health, and public employees — the load-bearing foundations of democracy and daily life.
The most meaningful insight I gained from serving on the City Council involved learning the functioning of government at the community scale: police protection, fire protection, water, sewer and inspection services, planning services, utilities, arts and cultural services, a fantastic library, community center, great schools and services for children with special needs. I get up every morning thinking about these public services and the people who make them happen, and I am grateful.
That is why I find it astonishing that so many people continue to fall for the falsehood that “government is bad.” Many of us immigrants have come from countries that have fallen apart in violence and disorder in the absence of a functioning government. Thousands of U.S. troops have died to establish a decent governing process in Iraq and Afghanistan, but here at home, we are told government is bad, private-everything is good, corporations are the greatest, and all things public are bad. Do our troops serving in Afghanistan know about the rush to diminish government at home?
Because government means “us,” less government means “less us.” It almost always means more corporate interest, not public interest, making decisions for us, and invariably leads to more inequality, injustice, and disparity. Worst of all, it means fewer public services. We have heard “government should be small,” but why have we not heard “corporations should be small and their influence on government limited?”
Less self-governance, providing fewer services, has produced results: contaminated eggs sickening thousands and contaminated meats killing children because we have not inspected and protected our food supply. Inspection services supposedly are “too much regulation.” Toxic releases, polluted air, contaminated drinking waters, the national financial crisis are all clear and predictable results of “less regulatory burden,” “less government” and more corporate irresponsibility.
Let us not forget that our properties, our lives, our neighborhoods, and our businesses are richer and better because there is police and fire protection, law, order, a system of fair courts, and regulations. We are better off because we are situated in and are beneficiaries of a publicly organized infrastructure that offers basic services to all, including protecting Iowa’s commonwealth which provide ecosystem services such as clean air and clean water. Public works.
While the process of governing ourselves is not perfect and can be improved, “less government” is no improvement. We are the lucky beneficiaries of many generations before us who gave so much to build this nation, but, as many of us immigrants know, democracy and self governance are highly perishable. They are not something we have, but something we have to make every day and nurture through our involvement. Like a garden, you have to tend it.
Kamyar Enshayan served on the Cedar Falls City Council from 2003 to 2011. Enshayan is director of the Center for Energy and Environmental Education at the University of Northern Iowa, where he teaches environmental studies. He has been a member of the Iowa Policy Project board of directors since July 2016.
We have entered a new world of executive authority in Iowa.
We all know the drill: The Legislature passes bills and the Governor signs or vetoes them, whereupon they become either laws, or nothing.
Not anymore, apparently.
The move by the Branstad administration to implement a new sales tax break worth an estimated $40 million a year — possibly more — is taking place outside the legislative session. If it succeeds, we have entered a new world of executive authority in Iowa.
Business lobbyists wanted the change, it could not pass the Legislature, and the administration thinks it has found a short cut: Change the longstanding interpretation of the existing law. Presto, tens of millions of dollars will be available for manufacturers. And those same tens of millions of dollars will not be available for schools.*
Consider a Des Moines Register guest opinion by Mike Ralston of the Iowa Association of Business and Industry, a lobbying group representing manufacturers who would benefit from the change:
Part of the change affects Iowa’s existing sales and use tax exemption for machinery and equipment used in the manufacturing process. The change is sound policy.
If that’s the case Mr. Ralston wants to make, let him make it during the legislative session. This rules change skirts the legislative process, and Iowans are noticing. Jon Muller writes in an insightful piece on the Bleeding Heartland blog:
It’s easy to look at political discourse today and conclude everything is a battle between Democrats and Republicans, the left and the right, liberals and conservatives. But far more is going on with this issue. … A Democrat will surely be Governor again someday, and it would be a mistake to set a precedent that allows the Executive Branch to so drastically change the tax climate. If Republicans in the Legislature do not stand up against this unprecedented over-reach of power, they will almost certainly live to regret it.
James Larew, an Iowa City attorney who was general counsel to former Governor Chet Culver, served for four years as Culver’s appointee on the Administrative Rules Review Committee, a panel of legislators who have the authority to delay the rule change from taking effect. He advised the panel: “This is new territory. What is sauce for the goose eventually becomes sauce for the gander, too.” Larew went on:
The balance of political power changes from one election to the next.
The balance of constitutional power — the relationship between the Iowa General Assembly and executive departments of government — is more serious and more lasting.
Broad interpretive powers given up by the Legislature, in one moment of time, concerning one issue, are not easily, later recovered.
As the Cedar Rapids Gazette opined in an editorial, the change “breaks the rules of good government.” The Gazette wrote:
The Branstad administration should drop its rule change bid and make its case to the General Assembly, which is elected to craft a budget and write tax policy. If it’s truly a great idea that will create jobs, as the department contends, surely the sales job won’t be that difficult.
Many businesses, we often note at IPP and the Iowa Fiscal Partnership, already pay no income tax in Iowa, and they just had their property taxes slashed. The corporate appetite for tax cuts is insatiable. Guess who pays?
* Note: The Department of Revenue estimate of the cost of this tax break to both the state and local governments is over $40 million for each of the first four full years of implementation, according to a document provided the Administrative Rules Review Committee. The Legislative Services Agency has told ARRC that it does not have enough information to determine the accuracy of that estimate. We have revised the initial version of this blog post to reflect this uncertainty, until state officials agree on an estimate.
The more small-business owners understand how big businesses compete unfairly and do not contribute their fair share of state taxes, the more pressure can build for real reform.
Small business owners get it: They follow the rules, but preferential treatment for giant companies puts them at a disadvantage.
Case in point: Lora Fraracci, who had an excellent guest opinion in today’s Cedar Rapids Gazette about practices big companies use to avoid paying U.S. taxes. The problem is not exclusively an issue with the lax U.S. tax code. It is a big problem at the state level as well.
Ms. Fraracci runs a residential and commercial cleaning business. As she noted:
“As a small-business owner in Des Moines, I play by the rules and pay my taxes to support our American economy. I create jobs that will continue to support our local economy. When the playing field is so uneven it makes it hard to realize this dream.”
The issue has been receiving some national attention, but many may not realize the prevalence of this problem and its extension to state taxes. While Ms. Fraracci and other small businesses, or Iowa focused businesses, follow the rules, large companies they may serve can find a way to either (1) avoid the rules, or (2) block stronger rules.
The Iowa Fiscal Partnership has written about these issues for some time, and the reports are on our website.
The biggest Iowa breaks come in two ways: tax loopholes and tax credits.
Tax loopholes have been estimated to cost the state between $60 million and $100 million a year. Loosely written law is an invitation to big companies’ lawyers and accountants to find ways to lower their firms’ taxes. Multistate firms can shift profits to tax-haven states and avoid taxes they otherwise would be paying in Iowa. That creates the uneven playing field Ms. Fraracci sees.
Iowa could fix this by adopting something called “combined reporting,” which the business lobby has fought tooth and nail when proposed in the past by Governors Tom Vilsack and Chet Culver. Many states — including almost all our neighbors (Illinois, Wisconsin, Minnesota, Kansas and Nebraska) — already do this. See our 2007 report, which remains relevant because Iowa has refused to act.
Tax credits are particularly costly, rarely reviewed with any sense that they will be reformed. This is illustrated best with the Research Activities Credit, which provides a refundable credit to big companies to do something they are likely to anyway: research to keep their businesses relevant and competitive.
In 2013, that credit cost $53 million, with $36 million of that going to companies that paid no state income tax in Iowa. The default position must be that this is wasted money, because it is never reviewed in the regular budget process the way other spending is examined every year — on schools, law enforcement, worker protection and environmental quality. In Iowa, spending on tax credits is spending on autopilot.
Read here about Iowa’s accountability gap on tax-credit spending.
Looking ahead, as a new legislative session approaches and we hear repeatedly that things are tight, keep these points in mind to better understand the real fiscal picture facing Iowa. The more small-business owners understand this, the more likely pressure can build for real reform.
Iowa and national leaders should follow Wallace’s example, and confront climate change just as Wallace and and other leaders of his day overcame the Dust Bowl and Depression of the 1930s.
A call to leadership on climate change
Republican Henry A. Wallace was Secretary of Agriculture in Democratic President Franklin Roosevelt’s cabinet. In a Sunday column in the Cedar Rapids Gazette, Wallace’s grandson makes the case that his grandfather — an Iowan and a crop researcher — would put science ahead of politics to respond to climate change. He would recognize climate change endangers all of us — farmers included.
Solutions are more important than politics, but right now politics is blocking what science is teaching us. With climate change upon us, the oil industry still is able to set — or block — policy that could turn back this frightening attack on our economy and environment.
As an Iowan, a scientist and a political leader, Wallace would point out that Iowa exports include renewable fuels and wind power as well as corn and hogs. Climate science also fits with Iowa economic advantage.
Each new scientific study warns us that a policy of more digging of coal, more fracking for oil will be lead us to more problems. A recent letter signed by 180 researchers and teachers at 36 Iowa colleges and universities make that point that climate change is already adversely affecting the state.
Iowa and national leaders should follow Wallace’s example, and confront climate change just as Wallace and and other leaders of his day overcame the Dust Bowl and Depression of the 1930s. Let’s put science over politics.
Posted by David Osterberg
Osterberg, co-founder of the nonpartisan Iowa Policy Project, is a professor of occupational and environmental health at the University of Iowa. He is one of 180 scientists and teachers who signed the Iowa Climate statement, available here.
Also see his recent blog: Climate change impacts showing up now
And see the Cedar Rapids Gazette column by Henry Scott Wallace: What would Henry A. Wallace do?
Doing what is right on wage theft also is doing right by the economy and by the taxpayer.
The Catholic Messenger in Davenport last week presented a good illustration of wage theft in the sad case of a group of men in Atalissa taken advantage of for decades.
A recent Cedar Rapids Gazette story looked at another case, in which an employee of a contractor for a now-closed Outback restaurant is fighting for wages she believes she is owed — even though the contractor remains in business, still serving another nearby Outback restaurant.
Iowans need to understand these are not isolated cases, but just the tip of the iceberg. Every year some $600 million is lost to workers and the Iowa economy because of wage theft, and about $60 million in taxes and unemployment trust fund revenues.
As Iowa Policy Project research has shown, wage theft takes many forms, and affects Iowans across a wide range of occupations, in both blue-collar and white-collar positions. That work goes on. IPP is at work right now on a new survey to document and collect worker experiences with wage theft and enforcement systems.
Yet corrective action passed by the State Senate (SF2295) was not even considered in the Iowa House in 2014. The bill would have required businesses to tell workers in writing how they would be paid — and to notify employees of deductions before they were made.
Meanwhile, enforcement has remained woefully underfunded, a chronic problem in Iowa left unaddressed by the 2014 session of the Legislature.
Doing what is right on this issue of wage theft also is doing right by the economy and by the taxpayer. When will Iowans demand action?
Iowa is on record that we will not ask the wealthy and well-connected to do more. Sometimes, not passing something says as much about legislative priorities as passing it.
The headline on my doorstep today says, “Legislature continues trend of passing fewer bills.” That lead story in the Cedar Rapids Gazette notes that for the fourth straight year, a divided Iowa Legislature has passed fewer than 150 pieces of legislation.
Ah, numbers. Can’t live with ’em. Can’t live without ’em. But in this case, they don’t make a lot of difference.
What matters are the words and the policies embodied in those 150 or fewer bills. It’s about quality, not quantity.
What have those bills included in recent years? Here are some key points:
- A commercial property tax overhaul that is tainted by big benefits to huge out-of-state retailers that need no help and pay too little in Iowa tax as it is.
- An expanded Earned Income Tax Credit that improves tax fairness for low- and moderate-income working families across Iowa.
- Funding to assure a tuition freeze remains for a second year in regents institutions.
- A small boost in child care assistance for working students, making them eligible for the benefit so they can get skills for better paying jobs to sustain their families.
What have those bills not included in recent years? Here are some noteworthy omissions:
- No overhaul of the personal income-tax system to better balance tax responsibilities for all taxpayers regardless of income, or to assure revenues are kept adequate to meet costs of critical services.
- No greater accountability on spending that is done through the corporate tax code, outside the budget process.
- No increase in the minimum wage, stagnant at $7.25 for over six years now.
- No broad expansion of child care access for struggling families who don’t make enough to cover costs, but make too much to receive assistance.
- No move to battle wage theft, which we have estimated to be a $600 million annual problem in Iowa’s economy — not including the $60 million lost in uncollected taxes and unemployment insurance.
- No long-term answers for funding of education at all levels, violating the promise of law for K-12 schools, and leaving a legacy of debt for many college students and their families.
Those are not exhaustive lists, but a statement of priorities established by agreement, stalemate or inertia. We covered some of these points in our end of session statement. Some will like the overall product of recent years, some will not. Few will ask how many bills were passed.
At least one theme weaved by this record cannot be disputed: Iowa is on record that we will not ask the wealthy and well-connected to do more. We pretend more often than not that we can meet our obligations to the citizens of Iowa without investing in the public services they require, that if we just keep cutting taxes all will be well. Every now and then we’ll say something about opportunity for all and mean it, but we’re not ready to make that a long-term commitment.
Sometimes, not passing something says as much about legislative priorities as passing it.