A Tale of Two Surpluses: How Iowa and Minnesota’s Handling of Their State Budgets are Propelling Them in Opposite Directions

Written By Preya Samsundar

“It was the best of times, it was the worst of times…” Those words were written by Charles Dickens almost 200 years ago, but it accurately describes what residents in Minnesota and Iowa are going through as they watch their state legislatures act on their behalf. 

In the last year, Minnesota and Iowa have seen surpluses fill their coffers. In September 2022, Iowa reported a budget surplus of $1.91B. In the last month, Minnesota’s surplus grew to a whopping $19B. However, it’s how they chose to respond that has made such a significant difference.

With an approximate $2B surplus, Iowa made the decision to progressively eliminate the state’s income tax. 

From Yahoo! News:  

“Iowa senators are advancing a bill that would eventually eliminate the state's income tax. That comes after Gov. Kim Reynolds signed a $1.9 billion tax cut last year that included phasing down the state to a 3.9% flat income tax rate by 2026.” 

For Iowa Republicans, they believe they need to “ensure” their state remains competitive. Their approach highlights the staggering difference Minnesotans face with a Democrat trifecta. 

As Minnesotans continue to process a $19B surplus, Democrats aren’t contemplating tax cuts. In fact, they’re rolling back promises to eliminate the tax on Social Security income and they’re proposing an ADDITIONAL $2.5 billion in NEW TAXES. 

With vast differences in the way these two states choose to treat their residents, is it any wonder that Minnesota continues to experience a mass exodus of businesses and people who are no longer interested in paying one of the highest taxes in the nation? 

 
 
Preya Samsundar
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