As bills cutting income taxes and property taxes advance in the Iowa legislature, it is clear that state lawmakers are listening to their constituents.
A Des Moines Register poll of Iowa adults conducted in early March found majorities favoring property tax cuts and gradual elimination of the state’s individual income tax.
Source: Des Moines Register
One question asked whether Iowans favor “cut[ting] property taxes, limiting what local governments could spend on services.” The 58 percent in favor far outnumbered the 34 percent opposed, with 8 percent unsure. These results reinforce conclusions from a poll Iowans for Tax Relief Foundation (ITRF) released in October 2022, which found 56 percent of Iowans support the State Legislature setting limits on how much local governments can tax and spend.
The Register’s poll also provided insight into the effect of respondents’ demographics on their opinions. Regardless of whether they live in rural areas, towns, cities, or suburbs, 50% of Iowans or more support cutting property taxes. The same can be said about residents of all four congressional districts, those making more than $100k as well as those making less than $50k annually, and parents with children currently attending Iowa public schools.
Given the large increases Iowans are seeing in property assessments in 2023, public support for property tax reforms will likely only continue to grow. Both the Iowa House and Senate have introduced property tax proposals, and the Register’s poll will likely encourage lawmakers to keep property taxes a priority.
Another tax-related question in the poll asked whether Iowans favor “gradually reducing the state’s individual income tax rate until it is eliminated.” Once again, Iowa adults favor this policy by more than 20 percentage points, with 56 percent supportive and only 33 percent opposed and 11 percent unsure.
As it happened, the Register released its poll the same day the Senate Ways and Means committee voted to advance a bill that would eventually eliminate the state income tax. If signed into law, this legislation would lower Iowa’s income tax rate to 3.55% in 2026, 2.95% in 2027, and 2.5% in 2028. Beginning in 2030, the proposal would change the taxpayer relief fund — the fund in which excess tax revenue is placed for return to taxpayers — into the “individual income tax elimination fund” and use the money to fund the eventual elimination of the personal income tax.
In October 2021, the state government’s surplus was $1.24 billion, and ITRF’s poll asked Iowans, “What do you believe should happen to those surplus dollars?” At that time, 59 percent of respondents said it should be “used to lower how much Iowans pay in taxes.” Now, Iowa’s surplus is nearly $2 billion, and the state’s taxpayer relief fund is on track to grow to $2.7 billion by the end of fiscal year 2023. Not only is the proposal to use these excess funds to lower Iowans’ tax liability good public policy, but it also responds to voters’ repeated preferences.
For decades, Iowa had some of the highest income taxes in the nation, though those rates have been on a steady decline since 2018. On the other hand, Iowa’s property taxes remain 10th highest in the nation. Recent changes, however, make clear that Iowa lawmakers are listening to their constituents. Perhaps they’re thinking of the public opinion polls we call “elections.”