This article was published in the Des Moines Register and The Gazette.
With constitutional protection, if a future legislature wanted to increase the income tax, then it would have to either build a consensus or have supermajority control of both chambers.
“It’s funny that government can never afford to cut taxes or spending, but taxpayers are never asked whether they can afford higher taxes,” stated columnist Cal Thomas. The voice of the taxpayer is often drowned out by special interests that demand greater spending. Senator Dan Dawson and Representative Bobby Kaufmann, who chair the Ways & Means Committees of the legislature, are pushing to ensure that taxpayers have lasting constitutional protections. As part of their tax reform proposal, Sen. Dawson and Rep. Kaufmann have introduced two constitutional amendments that would place taxpayers first before special interests.
The first constitutional amendment would require a supermajority (two-thirds majority) vote of both chambers of the legislature to approve an income tax increase. While this would be a strong taxpayer protection, it would not be unique to Iowa. Currently, 17 states have some form of supermajority requirement for tax increases, including seven with that protection enshrined in their constitutions. A supermajority requirement would also force the legislature to justify why a tax increase would be needed and it would require bipartisan support to approve an increase. This would force the legislature to build a consensus in order to pass a tax increase.
The second constitutional amendment being proposed would constitutionally protect the flat tax. Under current law, Iowa will transition to a flat 3.9 percent income tax in 2026. This would prevent a future legislature from jettisoning the flat tax in favor of returning to a progressive tax system. Specifically, the amendment “prohibits more than one income tax rate above zero.” All taxpayers across Iowa benefit when there is a single, low tax rate.
Critics of these taxpayer protections argue that they will not only bind the hands of a future legislature, but they are only intended to protect the tax cuts enacted by the Republican legislature and Governor Kim Reynolds. States that have a supermajority requirement are diverse in terms of their political culture. California, which is hardly a bastion of conservatism, requires a two-thirds vote in order to increase taxes.
Further, if a future legislature wants to increase the income tax, then it will have to either build a consensus or have supermajority control of both chambers. During a Senate subcommittee hearing Senator Jason Schultz described the amendments as a “citizen wealth confiscation prevention amendment,” which is an accurate description. Both amendments would help to prevent not only a higher flat tax rate, the establishment of a progressive income tax, or the creation of a “wealth tax.”
The debate surrounding these amendments is also part of the greater philosophical debate over fiscal policy. Do higher levels of spending and taxes create better services and an overall society? Iowa’s current fiscal situation proves otherwise.
Iowa’s fiscal foundation remains strong as a result of conservative budgeting and prudent tax reforms. For the past several years Iowa’s budget has been in surplus, the reserve accounts are full, and the Taxpayer Relief Fund is approaching $4 billion. Plus, the state budget continues to grow, but not as fast as critics of the Governor and legislature would prefer.
Another key point that is forgotten is that the last several years have seen numerous states reduce their income tax rates. Iowa is in competition for both jobs and people and tax rates matter, and a mass exodus is taking place in high tax states such as Minnesota and California. In addition, states that continue to increase both spending and taxes are having the greatest budget problems. Does Iowa really want to become the next California or Minnesota?
Finally, critics argue that amendments are “anti-democratic.” If the amendments make it to the ballot, Iowans will have the chance to approve or reject these measures. A majority of Iowans, close to 68 percent support a supermajority requirement. Also, The Des Moines Register poll found that 62 percent of Iowans support gradually eliminating the income tax. The last several elections demonstrate that Iowans support the fiscal conservatism of Governor Reynolds and the legislature.
Iowa taxpayers deserve constitutional protection.
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