Republicans have promised to reduce Iowans’ property taxes this year, and therein lies a problem. 

Iowa’s property tax system is the product of more than four decades of effort. Any significant changes are likely to disrupt the balance that has been achieved through years of compromise and agreement among the three main payers of property taxes – business owners, homeowners and farmers. 

Efforts to lower taxes will also be met with charges that lawmakers are attempting to defund the police, schools and public health. All depend on property taxes for their very existence, and all are already struggling.

Indeed, Iowa’s tax structure is a thing of wonder, not unlike a Rubik’s Cube. If you nudge one piece, it can have significant unseen effects on half a dozen other sectors of the state’s economy.

Gov. Kim Reynolds and Republican lawmakers did a lot of nudging last year when they reduced income tax rates significantly and eliminated taxes on retirement income. 

We’ve yet to see the impact of those reductions, but on the heels of November election victories, Republicans have said they want to make more cuts during the new legislative session that begins Monday.

They’ve said they want to continue reducing income tax rates, with Reynolds telling an audience in Florida in November that her goal is to eliminate income taxes in Iowa by 2026.

They have also targeted Iowa’s property tax system for an overhaul, although it is not clear what they want to change other than to reduce the amount of taxes collected from property owners.

Many previous attempts at overhauling the property tax system stalled in legislatures that were more evenly split between Democrats and Republicans.

But this year Republicans hold commanding majorities in both chambers and the governor’s office.

Last year, they demonstrated their ability for quick action, even with smaller majorities.

It’s a safe bet that this year anything is possible.

So let’s look at what it might take to simultaneously eliminate the income tax and reform property taxes.

The handful of states that do not have an income tax include Texas, Alaska, Wyoming, Nevada and Florida.

Rather than tax the incomes of individuals and businesses, those states receive the bulk of their tax revenue from other sources. In Alaska, Texas and Wyoming, those sources are oil and natural gas, resources that are abundant in those states. For Nevada and Florida, they are unnatural resources: gambling and tourist spending.

If Iowa were to eliminate income taxes, we would need some other taxable resource to keep governments functioning and at least attempting to deliver the services we have come to expect, including police protection, an educational system, transportation and health care. Otherwise, the result would be anarchy.

There is not enough gambling or tourism in Iowa to make much of a difference, so we would need some sort of taxable natural resource.

Our most abundant natural resource is farmland.

So it would seem that the most logical way for Iowa to join Texas, Alaska and Wyoming as income-tax free states is if we make farmland pay the bills, like oil and gas extractions do in those states.

Farmland, like oil and gas reserves, is increasing in value.

Iowa farmland is currently valued at roughly $350 billion, according to an annual survey by Iowa State University. That’s up 51% in the past two years, which were record-setting years for farmland values and farm commodity prices.

That two-year increase in value amounts to roughly $117 billion, which is nearly 14 times the state government’s annual budget of $8.2 billion.

If you taxed the full value of farmland ($350 billion) at the same rate I pay for property taxes on my house, you get about $8 billion, which again is what the state government spends in a year.

I don’t think that’s what Iowa’s farm-driven legislators have in mind.

But until we know more about how lawmakers plan to replace the revenues they will give up by eliminating income taxes, taxing farmland makes as much sense as anarchy.