Once again it appears that policymakers in Washington, D.C. are trying to further centralize power and squeeze the sovereignty of the states. The United States House of Representatives Judiciary Committee has a bill before them that would set a dangerous precedent regarding tax policy if enacted. It’s called the STAMP Act which stands for ‘Stop Taxes Against Menstrual Products Act of 2022’. It would tell states and local governments that they cannot levy a sales tax on the retail sale of menstrual products.
If passed, this would be a direct violation of the Tenth Amendment. The Bill of Rights itself was passed to reassure those Americans who worried the federal government would assume powers that would directly interfere with the sovereignty of the states, including taxation.
One topic that comes up frequently when we sit down with taxpayers across Iowa is the number of people our state government employs. Since more employees equal more state spending and more tax dollars that have to be collected, it is natural for Iowans to be curious about the issue.
The Legislative Services Agency reports in their most recent Factbook that Iowa spent over $1.5 billion in total compensation just three years ago, accounting for roughly 20% of that year’s state budget.
Since the year 2000, the state’s full-time workforce, excluding Board of Regents, Community-Based Corrections, or State Fair Authority employees, was reduced by over 25 percent by the end of 2019.
When examining this data closely, three periods emerge. Learn what happened during those periods and how political control influenced these changes.
Earlier this year, Governor Kim Reynolds and the Iowa Legislature passed the largest tax relief measure in the state’s history. The historic tax reform will replace the progressive income tax with a flat 3.90 percent rate by 2026. Iowa’s corporate tax rate will also gradually phase down until it reaches a flat 5.50 percent. Starting next year, the reform will repeal all state taxes on retirement income.
Iowa is leading the way in state-based tax reform. However, in the economic competition between states for businesses and people, Iowa cannot afford to be complacent. States like Missouri and North Carolina are either considering or have passed legislation that would eliminate corporate income taxes.
See how Iowa can build on this year’s tax reform and attract new businesses and people with a more competitive and tax-friendly climate.
July 1 marks the beginning of a new fiscal year. While the state has technically closed the books on fiscal year 2022, the accounting of funds is far from over and final numbers won’t be available until October. But no matter how 2022 is evaluated, Iowa is in a strong position moving forward.
Both Iowa’s cash basis (8% increase), and fiscal year/accrual basis growth (12.3% increase), are higher than the previous year showing that the state has plenty of revenue to cover its necessary spending responsibilities, while also providing taxpayers relief.
Read about how much the two largest revenue generators, personal income and sales/use taxes, increased and why the historic tax reforms passed earlier this year were so well-timed.
Chris and John joined the ITR Live Podcast to talk more about the policy missteps of Biden and D.C. Democrats, the popularity of Governor Kim Reynolds, and the latest instance of Congress trying to ignore the Consititution.
Click here to listen to the full podcast.