Sound tax policy begins with spending restraint

In 2026, the United States will commemorate the 250th anniversary of the Declaration of Independence. At the heart of the American Revolution — and within the principles articulated in the Declaration — is the sanctity of property rights. Matthew Spalding, a constitutional scholar, and author of the recently released The Making of the American Mind: The Story of Our Declaration of Independence, wrote that in many ways the right to property was the first principle at issue in the American Revolution.

“When the British began levying the first direct taxes on America, the colonists immediately considered it an unjust seizure of their property,” Spalding wrote. James Otis posed a similar question in 1763: “Can there be any liberty, where property is taken without consent?”

“As the Founders saw it, the right to property was not simply an economic concept and was much more than owning a bit of land. It was a first principle of liberty,” Spalding argues. Property is not limited to land or a home; it also includes financial assets.

The late Sen. Barry M. Goldwater echoed this understanding, “Property and freedom are inseparable: to the extent government takes the one in the form of taxes, it intrudes on the other,” Goldwater wrote.

It is in this spirit and in response to the growing frustration from taxpayers across Iowa that Gov. Kim Reynolds is proposing a comprehensive property tax reform measure. “The rate at which property taxes are rising is unacceptable, and Iowans expect legislation that delivers meaningful relief to be passed this year,” stated Reynolds.

“Property taxes are rising faster than inflation, faster than paychecks, and faster than population growth. In fact, over the last two years, they’ve gone up more than 10%. And that’s not acceptable,” she argues.

The increase in property taxes is not just a recent problem. Over the past 20 years property taxes have increased over 107%. In fiscal year 2026, local governments will collect over $6 billion in property taxes from taxpayers.

As Gov. Reynolds stated that is an issue that impacts Iowans in every community and income level regardless if it is rural or urban. Further, tax bills are growing faster than the ability for taxpayers to pay.

Government does not have an unlimited claim on the wealth of its citizens. Every dollar taken in taxes reduces a family’s or business’s ability to save, invest, or give. Property taxes function as a form of “wealth tax,” yet local governments often fail to recognize that a higher assessed value does not mean taxpayers have additional cash on hand to pay a growing bill.

Iowa taxpayers need reforms that protect their property — land, homes, and income alike. This is why Gov. Reynolds is proposing to limit local government spending.

“So this year, we need to go after the real driver of the problem: Spending. Spending is what drives taxes — always has, always will. And the most reliable way to protect taxpayers is to limit the growth of government itself,” stated Gov. Reynolds.

For that reason, the starting point for any sound tax policy discussion must be spending restraint.

Gov. Reynolds is calling for a 2% property tax cap, which would allow for new construction to be included. Debt service and school funding would be exempt under the proposal. A 2% property tax cap would begin to restrain the growth of property tax collections and force local governments to better control spending.

A 2% growth cap does not cut budgets or eliminate services. It simply slows the growth of property tax collections to a responsible, predictable level that better aligns with taxpayers’ ability to pay.

One reason why prior property tax reform measures failed to provide any substantial tax relief is that they did not address spending. Property tax caps are not a radical idea. Progressive states such as Massachusetts and New York have adopted them.

The 2% property tax cap is the centerpiece of a comprehensive property tax reform proposal that includes additional measures that will benefit taxpayers.

Gov. Reynolds and the Legislature have an opportunity to make the 250th anniversary of the Declaration of Independence especially meaningful by restoring balance between taxpayers and their local governments. By limiting spending, Iowa can protect the property rights that are the very foundation of American liberty.

John Hendrickson serves as policy director for Iowans for Tax Relief Foundation