Voters in Iowa have the chance to secure themselves against rogue tax hikes.
Voters in Iowa have the chance to secure themselves against rogue tax hikes.
T his November, Iowa voters will decide whether to require two-thirds of their representatives to sign off on new or higher income and corporate taxes. If Amendment 1 passes, a new total of 17 states will have bound their legislatures in some similar way.
Such debates must be about more than this or next year’s budget. They should acknowledge that state legislators’ spending habits are not always constrained by the will or needs of the people.
Supreme Court Chief Justice John Marshall stated in 1819 that “the power to tax involves the power to destroy.” He meant that left unchecked, a government has the ability to tax something — an incentive, a profit, a livelihood — out of existence. It’s easier still to drive valuable livelihoods across the nearest state line, as many governments have been doing lately.
Most supermajority states set the bar at two-thirds, as the Iowa amendment would do. Even California, which tends to stretch the limits of what can be taxed in America, is part of this group. Other states, such as Michigan, Oklahoma, and Arkansas, set the threshold at three-quarters.
These states have a backstop in place because legislators always face strong pressure to increase government spending. Whether a state is red, blue, or purple, it is relatively easy to get 51 percent of legislators to quietly spend the public’s money. The reason is simple: The benefits of the spending flow to the politically mobilized, while the costs are spread out among a huge, largely unaware bloc of taxpayers. A supermajority requirement acts as a constitutional check on the imbalance.
Nonetheless, Iowa has been cutting taxes to compete with neighboring states for business, workers, and residents. In 2018, its top tax rate of nearly 9 percent was the highest in the region. Now, it has a 3.8-percent flat tax. Meanwhile, neighboring Missouri and Nebraska are phasing their top income tax rates down to 4.5 percent and 4 percent, respectively.
If future Iowa lawmakers reverse course, workers will go elsewhere. My new research shows just how systematically large numbers of Americans are moving to states with lower tax burdens. States seeking to grow their economies must maintain competitive tax structures.
Applying the supermajority proposal to both personal income and corporate taxes is meaningful. Studies consistently rank high corporate taxes as the most economically harmful, followed by income taxes. Requiring broad agreement for tax hikes would therefore create the predictable economic climate favorable for growth. Businesses depend on predictability.
Opponents of Iowa’s amendment argue that tax cuts have caused large budget deficits. This is largely untrue. The state’s worsening fiscal position since 2023 has been driven just as much by unsustainable growth in government spending — up 18 percent and still $620 million above pre-pandemic trend levels.
Meanwhile, declines in Iowa state revenues largely stem from national and international economic factors. Corporate tax revenues have fallen since last year’s federal tax reform bill, the One Big Beautiful Bill Act, took effect. That law incentivized local businesses to reinvest profits into long-term, growth-fueling assets like factories, machines, and tools, rather than pocketing the profits and paying state taxes immediately. The state’s agriculture and manufacturing sectors are under stress and paying less in taxes due to the ongoing trade war and disruptions around the Strait of Hormuz, which are raising energy and transportation costs.
Some opponents of the amendment are not shy about their true intentions. One recently stated that if a two-thirds requirement existed, “We couldn’t restore a higher tax bracket on top incomes or enact a millionaire tax as some states have done.” Evidence from states that have tried to soak the rich casts doubt on whether it leads to much revenue at all. High earners leave, taking their income, businesses, and economic gravity with them.
John Marshall’s warning holds true two centuries later. Iowans are not being asked whether taxes should stay low forever. They’re not being asked whether spending should never grow. Rather, they’re being asked whether it should be easy for legislators to reach further into their pockets. It’s a chance to tie a government’s hands against the easiest political move available: spending someone else’s money.