Hardened hearts, and short-sightedness, at the Iowa Capitol

Iowa Republicans seek to kill effort to help poor people, but they're fine with tax breaks for big corporations that don't owe state taxes

Photo by Austin Goode on Unsplash

Republicans in the Iowa House hate government freebies.

Unless it’s their corporate friends who get them.

The latest evidence of this hypocrisy is the effort to kill a central Iowa program and prevent others like it that are aimed at helping poor people.

UpLift is a test program in central Iowa that gives $500 per month to 110 individuals who live with at least one dependent up to the age of 25 and who have a median household income of only $24,000 a year.

The program is partially funded by using federal funds awarded to the cities of Des Moines and Urbandale, and it is part of a broader effort to study the impact of providing unconditional cash to needy families in order to help them build financial security.

These kind of guaranteed income experiments are being targeted by conservatives across the country, according to a Wall Street Journal article this week.

The Journal article makes clear that much of the opposition to guaranteed income programs is the belief that they’re government handouts. The article quoted a Republican lawmaker from Texas opposing a guaranteed income program near Houston as “wide-open, no-strings-attached lottery socialism.”

I’ll let you sort out the word salad, but you get the idea. Republicans don’t like these programs because they think they’re handouts that don’t provide any greater societal value.

This appears to be the view of Iowa Republicans, too. Earlier this month, the Iowa House voted mostly along party lines, 55-43, to choke off public funding for UpLift and any program like it. The bill would require existing programs to end Jan. 1, 2025. The UpLift program is scheduled to run through April of that year.

State Rep. Steve Holt, the Denison Republican who floor managed the bill, raised several objections, but mostly his critique centered on the allegation these programs would kill Iowa’s work ethic and make Iowans dependent on government.

Apparently, these kinds of concerns don’t apply to Iowa’s corporations.

The state tax code is littered with handouts for Iowa businesses and corporations.

Just look at the Research Activities tax credit, which is aimed at fostering research in the state.

Over the past 14 years, Iowa has extended subsidies to the tune of more than $800 million to companies from just this one provision, much of it going to big corporations like Deere & Co. and Rockwell Collins, according to Common Good Iowa, which has targeted the tax break for years.

What’s more, a big chunk of this money is going to companies that don’t owe any state income tax. In 2023, for example, $35 million, or 42% of the overall annual total, went to businesses that didn’t owe any state income tax, Common Good Iowa says, citing a state report.

It’s notable that, for years, while most states maintained this kind of a research tax credit, Iowa was one of a minority of states that fully extended it to companies that don’t owe state taxes. The Legislature narrowed this handout as part of a larger bill a couple of years ago to lower corporate and individual income tax rates, but it didn’t eliminate it.

Americans tend to cringe at the idea of government freebies. And since the days of Ronald Reagan, right wingers have been pretty good at turning people against trying to use government funds to help people who are in need.

But that doesn’t stop lawmakers—in both parties—from using federal and state tax codes to help corporations that don’t need the help. It’s one of the things that irritate Americans the most about taxes, at least at the federal level. A Pew Charitable Trust poll last year said that 83% of Americans are bothered “a lot” or “some” by the feeling that corporations don’t pay their fair share of taxes.

What’s more, it’s not clear that Iowa’s research and development tax break is doing us much good. Still, there is a general belief at the Capitol it is worth the cost. So, it continues.

However, when a local government in Iowa wants to use non-state dollars to help families—two-thirds of which are employed, according to House Democrats, and who only make a third of the median household income —Statehouse Republicans stand in the way.

Holt said programs like this are just the beginning, that they’re laying the groundwork for a guaranteed income program at all levels. And that they’re counter-productive. But let’s be serious. This country will never support an Andrew Yang-style universal income program of $1,000 a month. It won’t happen. However, some of these programs just might provide some valuable lessons for how to help get families out of poverty, to put them on the road to success.

There have been a number of studies about these types of income programs. Yet, I’ve seen no recent study centered on Iowa.

What are they afraid we might learn?

Besides, we know Iowa’s poor need help, and getting people out of poverty serves a valuable public purpose. One in six Iowans weren’t even making enough money to meet their basic needs in 2022, an increase from the year before, according to a new study by Common Good Iowa.

We also know the state’s unemployment rate is historically low.

The idea that this kind of program will kill our state’s work ethic is ludicrous.

A $500 monthly stipend won’t discourage anybody from taking a job. It’s not enough money. But it might help a single mother pay for rising child care expenses that the Legislature has done next to nothing to limit; and it might help some Iowan pay the bills while being forced to stay home to care for a disabled relative because the state makes people with disabilities wait for years to qualify for a Medicaid waiver to pay for basic care; and it just might help an Iowan pay for a car repair so they can get to their job.

Republican legislators in the House don’t want Iowans to get this kind of help. But they’re happy to give a big tax break to some corporations that, next quarter, will report hundreds of millions of dollars in profits—but that won’t pay a dime in state income taxes.

That’s not fair.

Along the Mississippi is a proud member of the Iowa Writers Collaborative. Please check out the work of my colleagues and consider subscribing. Also, the collaborative partners with the Iowa Capital Dispatch, which provides hard-hitting news along with selected commentary by members of the Iowa Writers Collaborative. Please consider making a donation to support its work, too.