It's the wrong time for a tax cut in Iowa

Republicans who control the Iowa Legislature and GOP Gov. Kim Reynolds are talking about tax cuts.

Reynolds says she plans to unveil her tax reduction plan in January, and the only thing holding her back is uncertainty over a federal tax bill. Iowa’s tax code is heavily influenced by federal actions.

But Congressional uncertainty is hardly the only thing that should be prompting Republicans to think twice about cutting taxes.

Experts who track state tax revenues are forecasting continued slow growth, so slow the Legislature appears headed for another round of midyear budget cuts. It will be the second straight year that’s happened. In between, the state has been forced to make multiple dips into reserve funds to cover its bills.

Lawmakers have been unable to provide adequate funding for public schools, mental health treatment, water quality and a long list of other priority areas. Programs have been cut or eliminated.

Iowa’s agricultural sector is struggling amid low commodities prices, resulting in the state’s GDP losing ground in four of the last seven quarters. Iowa’s exports are slipping amid uncertainty over the future of trade deals put into jeopardy by the Trump administration.

This seems like a time for budgetary caution. It also seems like a moment for turning critical eye toward a lengthy list of special interest tax breaks and exemptions that steadily have chipped away at revenues — with precious little evidence of benefits.

Instead, Republicans want more tax cuts. Once again, reality is no match for partisan ideology.

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Republicans insist tax cuts will spur economic growth. We’ve heard this argument before. We heard it in 1997, when lawmakers passed a 10 percent income tax cut. Four years later, during a recession, plunging state revenues busted the budget.

We heard it in 2013, when lawmakers approved commercial property tax cuts and credits, while promising to backfill lost local government revenues. The mounting cost of that plan still is gobbling a large chunk of state dollars, and we have yet to see evidence the cuts have spurred promised growth. And now, amid budget woes, Republicans are considering ending those backfill payments.

There’s also ample evidence that economic growth is about much more than taxes. The state’s education system, infrastructure, natural resources and quality of life enhancements are critical to making Iowa an attractive place to move, start or grow a business.

Tax cuts can be smart policy with proper targeting and timing. But further slicing sluggish state revenue at a time when Iowa can’t afford to fund basic functions and services is reckless. Republicans should return to reality and rethink their plans.

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

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