Hawkeye Reporter

Iowa State Director Matt Everson and John Hendrickson, policy director for Iowans for Tax Relief, have co-authored an opinion piece in the Corridor Business Journal. The article supports Governor Kim Reynolds' fiscal policies amidst growing economic concerns among small business owners.

The May 2024 NFIB Small Business Economic Trends Survey highlighted pessimism among small business owners regarding the economy, particularly concerning tax and regulatory policies. The survey reflects a broader anxiety in Iowa over economic uncertainty fueled by high inflation. According to Everson and Hendrickson, these issues stem from "the failed fiscal policies of President Joe Biden." In contrast, they argue that Governor Reynolds and the Iowa Legislature are pursuing a different path focused on tax relief, regulation reduction, and limited government intervention.

This legislative session saw lawmakers approve a significant income tax cut that accelerates the implementation of a flat tax starting in 2025. Iowa will adopt a 3.8% flat tax rate, which ranks as the sixth lowest in the nation. Senate Majority Leader Jack Whitver stated that this change would allow "Iowa families [to] save an average of $800 on their state income taxes," with total savings amounting to $1.3 billion.

Since 2018, under Governor Reynolds' leadership, Iowa has been working to reduce and simplify its income tax rates. Previously burdened with one of the highest rates nationally—nearly 9% for individual income and 12% for corporate taxes—the state is now moving towards more competitive taxation.

The Legislature also advanced two taxpayer protection measures requiring further approval before appearing on the November 2026 ballot. One measure demands a two-thirds majority vote in both legislative houses to increase income tax rates—a practice already adopted by states like California. The second resolution seeks constitutional protection for the flat or single-rate income tax system while preventing future legislation from introducing progressive multi-tax rate systems or wealth taxes.

In addition to these measures, efforts continue within the Legislature to reform state government through consolidation of boards and commissions and enhanced oversight of regulations.

Everson and Hendrickson argue that Iowa's fiscal stability results from conservative budgeting practices rather than federal policies under President Biden's administration. They cite surplus budgets, full reserve accounts, and a $3.7 billion balance in the Taxpayer Relief Fund as evidence of this stability.

They question why progressive states such as California face fiscal challenges despite increased spending and taxation if such strategies are supposed keys to economic growth.

In conclusion, they assert that President Biden's policies contribute to economic pessimism due to inflationary pressures and uncertainties surrounding federal tax cuts renewal while crediting Governor Reynolds with providing economic stability through growth-oriented policies.