On June 29, Iowans will decide whether a minority of either house of the state legislature should have the power to block any increase in the state's personal income tax, sales tax or corporate income tax. There are several reasons why this proposed "minority-rule amendment" to Iowa's constitution is a cause for concern.
First, it violates the democratic principle of majority rule. Particularly in times of fiscal crisis, an obstinate or mischievous minority of the members of either the House or Senate could obstruct tax hikes needed to maintain vital public services, or exact unjustified legislative prizes in return for their votes.
Second, the amendment would bias Iowa's tax system against progressive taxes that have their greatest impact on the well-off and in favor of regressive taxes that hit middle- and low-income families the hardest. The minority veto on tax hikes applies to the only major progressive taxes in the state's tax policy arsenal--the personal and corporate income taxes. To be sure, the minority veto also applies to the state's biggest regressive tax, the 5 percent general sales tax. But other significant regressive taxes would be exempt from the minority veto.
For example, state excise taxes, such as the 20-cent gasoline tax, would not be subject to minority veto. Local taxes, including property taxes and the local option sales tax, also would be exempt for the proposed rule. With these kinds of regressive taxes much easier to increase than progressive taxes, it's highly likely that Iowa's tax burden would shift more onto middle- and low-income families.
This bias toward regressive taxes is especially troublesome given the recent history of Iowa taxes. A 1998 study by the Institute on Taxation and Economic Policy--Choices for Iowa: Building a Better Tax System--shows that there has been a substantial shift in Iowa's tax burden away from the wealthy and onto other Iowans since the 1980s. By 1998, the lowest-income 20 percent of Iowans paid 11.1% of their income in total state and local taxes, while the wealthiest one percent of Iowa residents paid only 8.5%. The minority-veto rule would make it harder to correct this unfortunate trend.
Finally, even for the dubious objective of limiting taxes and government services, the proposed minority-rule amendment is of questionable necessity. As recent events have shown, elected officials are delighted to cut taxes when revenues are plentiful and the opportunity presents itself. Even in times of fiscal crisis, those who have to answer to the electorate are reluctant to raise taxes.
There are many problems with Iowa's tax system, starting with the disproportionate share of the burden borne by middle- and low-income families. But giving a minority of legislators the power to block majority-supported efforts to improve tax fairness or to respond to Iowa's needs would make things worse, not better.
Tyson Slocum is a policy analyst with the Institute on Taxation and Economic Policy and a co-author of Choices for Iowa: Building a Better Tax System.
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