In the old days before the web, I used to go through the Reader’s Digest almanac to find interesting facts. One thing that always grabbed my attention was the tax tables for various states. Hey, I’m a nerd, spelled e-c-o-n-o-m-i-s-t. I remember being surprised at how heavily Iowa’s government taxed income.
In 1987, Iowa’s top state income tax rate was 9.98 percent, and that rate kicked in at an income of $45,000. That put Iowa into California territory. In California that same year, the top tax rate was 11 percent. But California Republican Governor George Deukmejian and the legislature dropped the top rate to 9.3 percent in 1988, and that rate kicked in at $47,000. I don’t know which part of the previous sentence is more surprising: that California’s government dropped the tax rate or that California once had a Republican governor. The two facts are connected.
Back to Iowa. Since 1996, when the government indexed the tax rates to inflation, Iowa has been moving in the right direction on taxes. In 1998, all tax rates were cut by 10 percent, making the top rate 8.98 percent. Then all rates were cut in 2019, making the top rate 8.53 percent.
This is from David R. Henderson, “Iowa Leads the Way on Tax Cuts,” TaxBytes, October 11, 2023, Institute for Policy Innovation.
Read the whole thing. You’ve already read half of it.
