ICYMI: Iowa’s Tax-Cut Triumph
Iowa's Tax-Cut Triumph
The Wall Street Journal | October 4, 2023
"Kim Reynolds is spending time with the Republican presidential hopefuls barnstorming her state, and we hope they’re taking notes on her record. The Iowa Governor has made her state a model of good tax policy, and she says she’s only getting started.
Ms. Reynolds said last week that Iowa wrapped up its fiscal year with a surplus of $1.83 billion. That may sound small compared with overgrown blue-state budgets, but it’s about 22% of what the Hawkeye State spent in 2023. It’s also the third surplus in a row in the Governor’s tenure.
These results have followed significant tax cuts that have helped the state’s economy. Since revenue surged during the pandemic recovery in 2021, Ms. Reynolds and the GOP Legislature have cut the state’s individual income tax rates. The top rate has dropped to 6% from 8.53% since 2022, and it is scheduled to drop to a flat 3.9% rate by 2026.
Crucially, state spending has grown modestly since 2021, despite annual increases in per pupil school funding. Steady job growth has pushed the state’s unemployment rate down to 2.9%.
The Iowa tax experience belies the claims of the left that cutting taxes produces deficits. In Iowa the tax cuts have helped to produce record surpluses that then can be used to cut income-tax rates further. Ms. Reynolds has also shown that you can cut rates across the board, even at the top, and succeed politically. The GOP presidential candidates could stand to ask her for a few tax-cutting pointers."
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