The truth about the GOP tax bill
In the closing hours of the 2018 session, Republicans rushed through a massive $2.8 billion tax bill with little time to let anyone review the bill or get input from Iowans. This week, Governor Reynolds signed the bill in to law.
Before session began, House Democrats developed three key principles to guide our work on any new tax plans: 1) it must balance the budget; 2) it has to be fair and simple for all Iowans; and 3) it has to provide relief for the middle class.
We crafted those principles to make sure the Legislature didn't fall into a similar trap like it did five years ago. That's when a huge corporate tax cut that cost the state billions was approved and soon led to state budget cuts, budget deficits, rising property taxes, and shortchanging public schools and health care.
Here's how the GOP tax plan stacks up according to our tax principles.
First, the GOP bill costs $2.8 billion and will not keep the state budget balanced. It's certain to do the opposite: leave the state with more debt and more budget cuts. At a minimum, Republicans should have at least paid back the millions they borrowed last year before passing a new round of tax breaks.
We've seen the devastating reality of similar large-scale tax cut plans passed in other states like Kansas and Oklahoma that bankrupted the state, slashed basic services, and then had to raise taxes again because it didn't work.
Second, instead of creating a tax bill that is fair and simple for all Iowans, Republicans actually raised taxes on Iowans by nearly $1 billion while slashing taxes on corporations by $483 million.
Similar to the federal tax changes, the new tax income benefits in the plan are skewed heavily to those at the very top at the expense of everyday Iowans. The top one percent of Iowans get 32 percent of the benefits with a new $153 million tax break. Millionaires alone get to split $88 million and get an average tax break of $8,774. Meanwhile, the average Iowa family making $60,000 or less would get just $56 in one year.
Third, a new tax plan should provide real relief for the middle class. Unfortunately, the GOP tax bill rewards the wealthy and special interests, but does little for working families.
Because of the way the bill is structured, one third of Iowans get no income tax break at all or actually end up paying more in income taxes.
Even if you are one of the families who gets the $56 income tax cut, your overall tax liability is likely to increase because you'll be paying higher property taxes and sales taxes for things Netflix, Hulu, and other on-line purchases. If you have kids heading to college in the near future, you'll be paying thousands more in tuition at your local community college or one of our state universities.
Reynolds and Republicans had an opportunity this session to work across party lines and craft a bill that helps everyday Iowans, but they chose to cut a deal with special interests behind closed doors instead. That's largely why the GOP's tax bill fails on every tax principle we outlined before session began.
When Republicans spend millions trying to sell their tax bill on the campaign trail this fall, everyday Iowans will just be realizing they haven't gotten much and will likely end up paying more.