Former legislator David Osterberg presented on the impacts of the tax rollbacks by the Governor and Republicans in the state at Voices United Wednesday, Feb. 4.
Osterberg said income taxes have been cut by Republicans in 2018, 2021, 2022 and 2024, all in an effort to get Iowa to a more flat tax rate of close to 3.8 percent.
“What that has amounted to is we now have a $1.3 billion deficit, because the government hasn’t cut spending at the same time they’ve been reducing taxes,” Osterberg said.
The Revenue Estimating Conference of the Legislative Services Agency is still unsure how much current taxes are bringing in with the last batch of income taxes.
“What we know is Iowa is not bringing in enough money to pay all of the state’s bills,” Osterberg said.
Alongside the decrease in taxes, the state has also been increasing funding to charter and private schools.
Osterberg said a flat tax is not an equitable tax, as it always hits the poor and low income populations more than it does for rich people. He noted that sales tax especially hits people differently, that those who are richer are able to weather the amounts they are paying.
Iowa remains at the bottom for economic growth, and generated just 2,700 new jobs in the past year.
Soybean farmers are not doing well, Osterberg noted, and the impacts of tariffs on farming have led to reductions of jobs in factories at John Deere locally.
Osterberg said there are currently three plans proposed for property tax reform in this legislative session. The governor and house propose a two percent cap on revenue growth for communities in the state and to rollback reassessments of properties to every three years, not every two years. The house also proposes a $250,000 exemption for all households.
The senate version goes further, with a 50 percent exemption on the first $350,000 on a primary residence. It also adds property tax exemption for those 60 or over if their home is paid off that would go into effect in 2029.
A questioner asked if this is in reaction to property increases that were seen in California in the 1970s.
Osterberg said while property valuations are up across the state, the prices are not as out of hand as they had gotten in California, where those rates went up by millions in valuation.
“No one wants to volunteer to pay more taxes, but the policies proposed by the legislature do not fund services we expect from our local governments and schools,” Osterberg said.
Osterberg said there could be policies that would not impact the poorest the most.