The late Supreme Court Justice Sandra Day O’Connor encouraged people to “solve relevant problems,” as her son recently reminded us.

It’s a timely message, and one Iowa lawmakers should take to heart, given the amount of time they’ve spent micromanaging schools and creating unnecessary school vouchers, while ignoring safety concerns in nursing homes, prisons and other workplaces. 

It’s also a suggestion that applies to ill-advised tax cuts, as the Center on Budget Policy Priorities notes in a Nov. 30 statement that warned:

“State policymakers nationwide have embarked on a tax-cutting spree over the past three years, using the cover of temporary budget surpluses stemming from robust federal aid in response to COVID-19 and the economic recovery that followed. … 

“The tax cuts – most of which are permanent and tilted toward wealthy households and corporations – will weaken state revenues by large and growing amounts over time, limiting these states’ ability to maintain support for schools and other vital public services or make new investments that can strengthen the economy and promote opportunity,” the statement said. 

Iowa is one of the 26 states cited. A chart shows Iowa lawmakers’ tax cuts in 2021 and 2022 were the fifth largest during that three-year span.

Iowa’s Legislative Services Agency has estimated that annual revenue lost will total nearly $1.9 billion by 2028. 

That’s nearly 20% of Iowa’s current net tax receipts. 

To get a better idea of what that means, think what would happen if 20% of your income disappeared. Could you afford to pay your mortgage or rent? Would you have to cut back on groceries? Drive less? Eliminate vacations? Would you be able to pay medical bills, or buy educational and athletic equipment for your children? Could you save for retirement?

At the state level, 20% less income will mean less money for public schools, which have not kept pace with inflation for several years as it is. Health care in Iowa will spiral downward, with fewer doctors and nurses serving larger patient loads, especially in rural areas, as the best clinicians move to states with more liberal payments. 

Eventually, infrastructure – roads, water and sewage treatment systems – will deteriorate; rural broadband, if it ever gets built, won’t be maintained without public dollars to repair damage from storms and equipment glitches.     

Mike Owen, deputy director of Iowa City-based Common Good Iowa, has warned repeatedly about Iowa’s tax cuts, most recently in an Oct. 13 column in the Cedar Rapids Gazette that was headlined: “Warning: Cliff ahead in Iowa.”

In it, Owen explained that Gov. Kim Reynolds mistakenly credits the tax cuts for creating recent state budget surpluses – as if that makes sense – when it was really the huge amounts of federal spending that resulted from COVID shutdowns and infrastructure rebuilding. 

But the governor and Republicans who control both chambers of the Iowa Legislature aren’t listening. They now say that, after making deep cuts in Iowa’s income tax rates, they will begin working this month to eliminate Iowa’s income tax.

Such a move would ultimately require massive restructuring of Iowa’s tax system with huge increases in either the sales tax or property taxes – the only taxes capable of recovering even a portion of the $5.3 billion generated by the personal income tax and the $900 million from corporate income taxes. 

Or they might have to create new farm-related taxes, because agriculture is the only Iowa asset large enough to support – even at greatly reduced spending levels – the types of state services Iowans expect from the government. 

But that’s not likely. So, what happens? 

Remember the holiday movie “It’s a Wonderful Life,” starring Jimmy Stewart as George Bailey, who runs a savings bank in the small town of Bedford Falls? Without sufficient tax revenue, Iowa would become the 21st century equivalent of Pottersville, which is what happened to Bedford Falls when George Bailey was erased and wasn’t there to keep reinvesting the savings of local residents. The evil banker, Mr. Potter, took over and ran the community into the ground.

I’m not sure who Iowa’s George Bailey is, but I have some ideas about Mr. Potter.