We all know the story of the Titanic: The grand ship struck an impossible-to-miss iceberg while cruising the ocean, which led to the freezing cold demise of the working class people onboard. The story of the Titanic brings to light the reality of what happens when the ship hits the ice — the wealthy, first-class passengers get towed away to safety on lifeboats, and the working class passengers are left to die out in the cold.
The Titanic’s grave lesson remains relevant: In December 2017, Trump and congressional Republicans rammed the Tax Cuts and Jobs Act, more commonly known as the Trump tax cuts, into law. The law was so haphazardly thrown together at the last minute that it had handwritten notes in the margins. Trump touted the law as a surefire revitalization of the middle class, claiming that it would “cut taxes for hardworking, middle-class families” and provide tax relief to small businesses; that turned out to be a baldfaced lie for those of us in Iowa. The first-class passengers of the Trump tax agenda — the ultrawealthy — are being towed away to safety and prosperity on lifeboats. The rest of us are being left on the sinking ship.
Iowa is on the dangerous path to an irreversibly broken economy, and a new report tells the story of how we got here.
The Iowa Policy Project and Tax March Iowa jointly released a new report that found in Iowa, 84 percent of the tax cuts in Trump’s tax scam have gone to the top 40 percent of taxpayers, while the bottom 40 percent are getting just 7 percent. The report also found almost a quarter of the law’s benefits have gone to the richest 1 percent of taxpayers, whose incomes average over $1 million — those taxpayers are saving $35,000 a year, compared to $700 for the middle-income group, 8 percent of whom actually paid more in taxes. The bottom fifth of Iowa taxpayers gained on average about barely enough for a hamburger and fries once a month.
The report also shed light on the failure of Opportunity Zones, the tax-incentive development program enshrined by the Trump tax law. When the Trump administration announced this program, they declared Opportunity Zones would channel unrealized capital gains into impoverished neighborhoods by delaying federal taxes on gains and would “revitalize” those neighborhoods — predictably, that is not what’s happening. This program could have been a lifeboat for working class communities; instead, Trump made it a lifeboat for the wealthy.
As the report notes, there are 57 national funds created through the Opportunity Zones program and nine Midwest-region qualified funds. Of the nine Midwest funds created through the Opportunity Zones program, not one of them is exclusive to Iowa. This means an Iowa investor gets a huge tax credit for investing in those Midwest funds, even though every single one of those funds has investments outside of Iowa.
Long story short: The tax-incentivized investment funds created by the Trump tax law that were supposed to benefit struggling communities in Iowa are benefiting other states on Iowa taxpayers’ dime.
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By failing to decouple the state income tax from the federal opportunity zone provision, working Iowans are subsidizing the wealthiest in the state for investments that benefit other states — this means money is being taken from the pockets of the Iowa treasury and Iowa taxpayers. Opportunity zones have ended up being a wave of developments financed by and built for the wealthiest Americans at the expense of hardworking taxpayers.
As we enter 2020 on the heels of this haphazard law’s two-year mark and the nation’s chance to decide its moral and political leadership draws near, we must hold accountable the people who burdened Iowa taxpayers with the check for other states — Joni Ernst and Chuck Grassley chief among them. Senators Ernst and Grassley voted enthusiastically in favor of the Trump tax cuts that have forced Iowans to subsidize tax breaks for the wealthy that don’t benefit them and returned a fast food meal’s worth of money back to us, at best. Like the people on the Titanic, we can’t afford to ignore the fact that the iceberg is drawing closer.
It’s time to repeal the Trump tax cuts and unrig the tax code to build an economy that works for all of us, and it’s time to hold accountable the bad actors who forced hardworking Iowa taxpayers to foot the bill for a giant giveaway to the rich.
Sue Dinsdale is executive director of Iowa Community Action Network and leads the Iowa Tax March.