If Iowans want a glimpse of their future, they might just look to the south. To Missouri.
Republicans there are asking people to approve a constitutional amendment next month to eliminate the state income tax and authorize an expansion of the sales tax to make up for the lost revenue.
This would be a big change—and not a good one.
The Missouri Budget Project, which has been critical of the plan, said this tax swap would mean more than tripling the state’s general sales tax rate or significantly expanding its base, to include things like health care and childcare. This would hurt older and middle-class Missourians, while helping the rich, according to the Institute on Taxation and Economic Policy.
A coalition of opponents is fighting back. But big money—from somewhere—is supporting the proposal. The Kansas City Star reported this week that almost $10 million has been donated over the past two months to try to pass this tax swap. However, the newspaper reports the source of the money hasn’t been disclosed, “leaving voters in the dark about who is bankrolling the plan to overhaul the state’s tax structure.”
Across the country, a number of states, mostly Republican-led, have been aggressively moving toward this kind of a tax swap. And they’ve been egged on by the Trump administration.
In Iowa, we have already started down this road. Even as our leaders haven’t explicitly acknowledged it.
Between 2019 and 2025, the state’s sales and use tax revenues rose by $1.3 billion, or an average of about $1,100 for a household of three. (About two-thirds of this was attributable to inflation.)
Meanwhile, net income and corporate tax revenues went down during this period, with the biggest benefits going to the wealthy.
Republicans call this a “pro-growth” tax code. Which is true in the sense that it grows the incomes of the rich. But for the rest of us, it simply shifts the tax burden for state government from the well off to the rest of us. And the rest of us weren’t doing so well in the first place.
Real median household income under the Republican trifecta has grown by an average of just 1% per year. Meanwhile, the 10,000 state income tax filers making more than $500,000 per year were expected to reap a windfall of more than $320 million in 2026 from the change to a flat tax.
Now, Republicans are seeking to protect those gains. They have put a proposed constitutional amendment on the general election ballot this November making it harder to raise income and corporate taxes than it is to raise the sales tax. Under the proposed amendment, an income tax increase would require a two-thirds super-majority in both houses of the Legislature to pass. A sales tax increase would still only need a simple majority.
This is no accident.
Reynolds has said she would like to eliminate income taxes in Iowa. And in April, Zach Lahn, the Republican nominee to replace her, said on the Iowa PBS program “Iowa Press” that he, too, wants to eliminate the income tax and rely on property taxes and sales taxes to pay the bills.
Lahn has also said he doesn’t want to raise any tax, but jettisoning the income tax would undoubtedly mean an increase in sales and use taxes. It’s unavoidable. Income taxes and sales and use taxes are, by far, the largest revenue generators for the state’s general fund.
Each of these two types of taxes raise roughly the same amount of revenue. Lose one and the other will go up. Anyone who tells you otherwise isn’t telling you the truth.
Even if income taxes aren’t eliminated, making it easier to raise the sales tax is a sure-fire recipe for it to increase—especially in the event of a recession or some other budget calamity. When Iowa ran into budget trouble in the 1980s and ‘90s, the Legislature raised sales tax rates, and it significantly broadened the base to cover online goods and subscriptions in 2019. The state also more than doubled the tax on gasoline over the last 43 years. The top income tax rate, on the other hand, peaked in 1975, and has dramatically declined since then.
Another sales tax increase would be bad news for the average Iowa taxpayer.
An $1,100 increase in the sales tax hurts households making $50,000 a year a lot more than it does the one making $500,000 per year.
Here’s the truth:
The special interests in Iowa are afraid voters will eventually demand that legislators revoke the hefty income tax breaks they gave to the wealthy a few years ago. So, now they’re trying to change the state Constitution to head that off, thus making it easier to raise the sales tax instead. But like in Missouri, Iowans can stand up to the special interests and fight. They can reject this disastrous amendment and demand we return to a fairer tax code.
A special request
Next month will mark the four-year anniversary of Along the Mississippi. I believe this publication, which I created after leaving a three-decade career in daily newspaper journalism, is playing a part in telling the truth about what’s happening to Iowa at a unique time in our state’s history.
Your contributions help make this work possible.
Please consider upgrading your subscription to paid, if you are able to do so. If you’re already a paid subscriber, I appreciate your support. Thanks for your consideration, and as always, thank you for reading.
Along the Mississippi is a proud member of the Iowa Writers’ Collaborative. Please check out the work of my colleagues and consider subscribing to their newsletters. The Collaborative also partners with the Iowa Capital Dispatch, which provides Iowa news and commentary, including by members of the Iowa Writers’ Collaborative. Please consider making a donation to support its work, too.
Those promoting moving away from income taxes to increased sales taxes must have forgotten their civics class lesson that sales taxes are regressive.
Or they think that is a good thing. 😡
Replacing income tax with a jacked-up sales tax is a cross-generation big deal, but candidates are dropping the ball—I'm seeing virtually nothing about it on social media. People hear "sales tax" and think it’s fair because it sounds flat, but working Iowan spend more of their available money getting by. Sales taxes only mean a far bigger chunk of working class or middle income Iowans' disposable income goes to taxes, while the wealthy barely feel it. It leaves our kids holding the bag. How will candidates pay for their greater support of public schools, health care, clean water, etc.?