Staff Columnist

Statehouse secrecy unleashes Republican tax plan

Iowa Gov. Kim Reynolds delivers her Condition of the State Address to a joint assembly of the of state legislature at the Iowa State Capitol in Des Moines, Iowa, on Tuesday, Jan. 9, 2018. (Jim Slosiarek/The Gazette)
Iowa Gov. Kim Reynolds delivers her Condition of the State Address to a joint assembly of the of state legislature at the Iowa State Capitol in Des Moines, Iowa, on Tuesday, Jan. 9, 2018. (Jim Slosiarek/The Gazette)

With the “historic” tax cut bill on its way to Gov. Kim Reynolds’ desk, it was time to party.

“Senate Republicans retreated into a closed-door meeting immediately after the passage of the bill, but their cheers could be heard emanating out into the Senate chambers as they celebrated the achievement,” The Des Moines Register reported Saturday.

Never has a closed-door celebration been so appropriate, considering how this was a bill conceived and born in backrooms, all $2.1 billion of it. Put an ear to the door. Press your nose to the glass. That’s all the closer you’ll get. Do not disturb, pesky Iowans.

It’s been quite a transformation since Reynolds stood in the House in January outlining her tax reform goals. She wanted to scrap federal deductibility, lowering falsely high income tax rates, simplifying the code and shielding Iowa taxes from federal whim. She wanted to increase the standard deduction, a move that could help middle-income Iowans. With budget challenges ahead, Reynolds decided a corporate tax cut would be too expensive, for now.

“It’s no secret we are working through difficult times with our state budget. So we have to focus on what we can afford,” Reynolds said.

And yet, the tax bill passed Saturday just ahead of adjournment will cut revenues $600 million more over six years than what the governor proposed, according to an analysis by the left-leaning Iowa Policy Project. It cuts corporate income taxes, and even creates a pricey new exemption on “pass-through” business income. Meanwhile, Iowa’s existing mountain of business tax credits and exemptions stands unscathed.

An increase in the standard deduction was deleted. Iowans who earn $60,000 or less get just 13 percent of the bill’s tax relief, according to Department of Revenue estimates. The 2.5 percent of Iowans who earn more than $250,000 annually get 46 percent.

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Federal deductibility remains until 2023, and it’s scrapped only if state revenues clear 5 percent, according to the policy project. Not likely, so this is hardly tax “reform.”

Republicans applied sales taxes to an array of digital products, such as Netflix, ride-share services and other “new economy” items. Subtract those new taxes, and maybe a couple of Cedar Rapids speed camera tickets, and your tax cut might disappear.

It’s no accident Reynolds’ relatively restrained tax proposal turned into a Great Iowa Treasure Hunt for corporate interests and wealthy GOP donors. This is what happens when a bill is crafted in secret. This is the kind of legislation you get when the desires of a few, with access, trump the needs of the many, on the outside looking in.

This bill was negotiated behind closed doors for nearly a month. What horses were swapped? Whose fingerprints are on its details? Who knows? A deal was announced on a Friday evening, and an actual bill, along with numbers on its impact, didn’t come for days. The final version of the 150-page bill was filed a day before its Saturday passage.

Like so much of the last two years, it’s a triumph of unrestrained power politics. We’re forced yet again to swallow a turbid cocktail of cynical strategy, rigid ideology and glugs of secret sauce. Cheers.

l Comments: (319) 398-8262; todd.dorman@thegazette.com

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