Governor Kim Reynolds in her Condition of the State address outlined a bold, conservative, and pro-growth policy agenda that places Iowa taxpayers and families first. Opportunity was a major theme of the Governor’s address, and she also acknowledged the “Iowa nice” mentality that drives our state and is at the heart of civil society.
At the center of the Governor’s policy agenda is a bold pro-growth tax reform plan. Since 2018, Governor Reynolds has made tax reform a priority. She understands that Iowans not only need to keep more of their hard-earned income, but also high tax rates discourage economic growth and opportunity. In addition, the Governor understands that Iowa is in economic competition with other states, and we cannot become complacent as other states are lowering their tax rates.
As a result of conservative budgeting Iowa’s fiscal house is on a solid foundation. Currently, Iowa’s budget is running a $1.24 billion surplus and the reserves are full. As a result, the Taxpayer Relief Fund will have over a $1 billion for income tax reductions and this is expected to increase by close to another $1 billion by the end of the year. The purpose of the Taxpayer Relief Fund is to return dollars back to the taxpayer. The massive surplus is good news, but as the Governor stated, “we’re still taking too much from Iowans’ paychecks.”
Governor Kim Reynolds is proposing a comprehensive tax reform plan that calls for a 4 percent flat income tax by 2026, gradually reducing the corporate tax to 5.5 percent, and repealing state taxes on retirement income. This is a pro-growth tax plan.
Under the Governor’s proposal the income tax cuts would “occur gradually over the next four years” so that the priorities of government are protected. The progressive income tax brackets would be replaced by a 4 percent flat tax, which will save taxpayers $1.583 billion by 2026.
The corporate tax rate would also be reduced under the plan. The current top corporate tax rate is a high 9.8 percent and under the Governor’s proposal, the rate would be reduced until it reaches 5.5 percent. The path to reducing the tax rate will follow corporate tax revenues and when they exceed $700 million in a fiscal year the surplus will be used to lower the rate.
Critics of the Governor’s tax plan will certainly argue that this will deprive dollars from numerous programs. However, the “Blue State” progressive tax and spend blueprint does not lead to prosperity. Governor Reynolds has demonstrated that a state can grow and create opportunities through fiscal conservative policies. Iowa only needs to look at Illinois, California, New York, and other “Blue States” to see how a state cannot tax and spend itself into prosperity.
Governor Reynolds in her speech even took on the tax and spend philosophy when she stated that “under these ceilings, next to this marble, among these columns and portraits, it’s tempting to believe that nothing good happens unless we legislate it, regulate it, or fund it.”
This is the progressive philosophy that only government can create opportunity and prosperity, but as the Governor mentioned, “we’re strong because we’ve been guided by the lights of common sense, fairness, and freedom. By the knowledge that bold action isn’t always government action. It’s Iowans making their own decisions for their own families and future.”
Further, the Governor reminded legislators that “in the small towns, around kitchen tables, in the fields and back-offices, Iowans understand that we in this building don’t fund anything. They do.” Having government get out of the way and allowing taxpayers to keep more of their income will only lead to a more productive and prosperous economy.
“Yes, we’ll have less to spend once a year at the Capitol, but we’ll see it spent every single day on Main Streets, in grocery stores, and at restaurants across Iowa. We’ll see it spent in businesses instead of on bureaucracies,” noted Governor Reynolds.
Governor Reynolds also took on the education monopoly and stood with parents across Iowa who are growing more alarmed about the radical curriculums and related content that are plaguing public schools. Parents in Iowa, just as across the nation, are growing more frustrated about school boards and administrators not listening to their concerns.
Governor Reynolds acknowledged hearing the concerns of parents and called for “full transparency” in both curriculum and books that are being placed in school libraries. “All schools should be required to publish what they’re teaching…The same goes for the books in the library,” stated Governor Reynolds. This is in reference to the concerns many parents have brought up about books with vulgar and sexually explicit content.
In addition to pushing for full transparency and accountability requirements for school curriculum and library materials, Governor Reynolds continues to advocate for greater parental choice in education. During the last legislative session, the legislature expanded open enrollment, reduced barriers to creating charter schools, and eliminating voluntary diversity plans.
The Governor is proposing to expand parental choice with the Student First Scholarship, an Education Savings Account (ESA), which would allow a portion of the state per pupil cost to follow the student to a school of their choice. The Student First Scholarship will be directed toward lower and middle-income Iowans.
Allowing greater parental choice in education and requiring greater transparency and accountability in education will only help to improve Iowa schools. The Governor correctly pointed out that “school choice isn’t a zero sum game” and it “has the potential to raise the quality of all schools.” As Governor Reynolds stated if our “schools succeed, Iowa becomes a ‘destination of choice’ for parents everywhere.”
Governor Reynolds in her speech also addressed reforms in workforce, continuing to reduce regulations regarding occupational licensing, and other policy issues that are directed towards strengthening the economy, getting more people back to work, and creating opportunity.
Conservatism is working in Iowa. Iowa is in strong condition thanks to the conservative values and policies being championed by Governor Reynolds and the Republican legislature. Last night Governor Reynolds demonstrated that not only is she boldly leading Iowa, but she is also a national conservative leader.
John Hendrickson is policy director for Iowans for Tax Relief Foundation