Small business owners are becoming increasingly frustrated with the fallout of policies driven by the Biden administration. As out-of-control spending continues to be the name of the game in Washington, D.C., Iowans are experiencing inflation that hasn’t been seen in four decades. It’s no secret that in our personal economies we are paying more for gas, groceries, utilities, and daily needs—that is if the shelves aren’t empty.
From an entrepreneur’s perspective, businesses are facing higher input costs that are going up way faster than can be passed along to customers, which is stretching budgets like Laffy Taffy and killing margins. Every day, I tip my hat to employees on the job because policies that discourage putting in an honest day’s work are contributing to labor shortages and supply chain disruptions. Add on the threat of higher taxes and additional bureaucratic red tape, and it’s the perfect cocktail for Main Street bankruptcy.
Biden and his allies in Congress would do well to look to the Hawkeye State to reset their agenda and guide future policymaking. Or at least get out of our way. The genius of the American federalist system is we have 50 experiments in democracy where we can all learn from the successes and failures of others.
Iowa’s experiment is working brilliantly. Gov. Kim Reynolds has kept her promise to create a tax and regulatory environment that fosters entrepreneurship, economic opportunity and prosperity for Iowa families. And the benefits of her restrained, fact-based approach to addressing the coronavirus pandemic are also undeniable. Compared to neighboring Illinois, Wisconsin, and Minnesota—whose governors drank (are still drinking?) the government overreach Kool-Aid—Iowa’s economy largely remained open for business.
Chief among Gov. Reynold’s policy victories to celebrate is the latest round of Iowa state tax cuts. Reynolds recently signed legislation into law that will, among other reforms, incrementally introduce a flat income tax rate of 3.9% by 2026. That slashes the current rate paid by Iowans by up to 54%. The reforms are expected to pump nearly $2 billion back into the economy annually.
Small businesses are poised to benefit big time because many entrepreneurs pay taxes under the individual code. So, while Iowa families will experience financial savings as a result of the tax cuts, so will thousands of Iowa’s Main Street businesses. The extra money left in the till will be used to hire more workers, raise employee wages, expand operations and invest back into the community. The financial boost will also help to cover inflationary pressures that are pushing the cost of input materials through the roof.
As a small business owner myself, I’ve seen this play out firsthand. My wife and I own and operate a small business in Waterloo that has developed and produced performance horse-drawn vehicles for more than 120 years. Our 23,000 square-foot manufacturing plant has withstood the test of harsh Iowa winters and summer storms, and with the continued support of small business-friendly policies, we intend to be around for a long time to come.
It is apolitical to say that Americans are frustrated with deteriorating economic conditions rooted in policies coming out of Washington. The media might pretend the problems are due to war in Ukraine, but the truth is the problems have been building since the first executive orders were signed in early 2021.
Washington—and other states across the country—would do well to reset their policy priorities and follow in the Hawkeye State’s footsteps.
Erik Lee is the owner of The Jerald Sulky Company, a small business in Waterloo.