Who can fix inflation? Iowa congressional candidates focus on taxes, spending

By: - October 26, 2022 5:58 pm

Candidates for Congress and U.S. Senate agree inflation is the problem but they diverge widely on solutions. (Illustration via Getty Images)

Government spending and high taxes have worsened recent inflation’s effects on low- and middle-class Americans, Iowa’s Republican congressional candidates argue as they aim to take back U.S. Congress.

But Democrats say investments are necessary to help families struggling with recent soaring prices and say these programs can be financed by raising taxes for the wealthy.

Republican Zach Nunn, who hopes to unseat Third District Rep. Cindy Axne in the November election, has made budget reform a central argument of his campaign. Nunn touts his experience in the GOP-controlled state Legislature, which passed reductions to state income and corporate taxes this year, in addition to eliminating the tax on retirement income.

The state ended the year with a $2 billion surplus. Republicans credit their budget policies, but Democrats cite billions in federal money flooding into the state and the chronic underfunding of education and other programs.

“What we need to do is take what has worked so well here in Iowa, and give it back,” Nunn said during an August event. “Give back your tax money and watch what happens with the economy, just like here in Iowa.”

He wants to bring Iowa’s approach to tax reform to Washington, D.C., he said. He and other candidates have contrasted the state’s approach to spending with the federal government’s – specifically arguing programs like the Inflation Reduction Act won’t fix the country’s economic problems.

Nunn and others have used the estimated hiring of 87,000 new IRS agents as a talking point against the Inflation Reduction Act. He pledged at an October rally to cut back government spending and overreach.

“If we can take Washington, we can make an impact,” Nunn said. “One very immediate impact we can have is cutting back the size of government, beginning with those 87,000 IRS agents.”

But Axne highlighted the changes to tax code in the legislation. She stressed the law does not increase taxes for anyone that makes less than $400,000 annually, but requires at least a 15% tax rate for companies that make more than $1 billion a year.

The hiring of IRS agents will help audit big businesses, she said, not increase the burden on normal Iowans.

“What happens is (Iowa small business owners) stand a better chance of getting audited than Elon Musk,” she said at the Iowa State Fair. “So we’ve got to make sure we’re addressing this across this country.”

Grassley points to tax reform

There are steps Congress should take to reform tax laws in light of inflation, Sen. Chuck Grassley said. The longtime Republican senator pointed to an effort he’s made to index tax benefits to adjust for inflation. He said by these programs encourage lower- and middle-class families to save, which will help balance supply and demand.

“Probably if you have 1 or 2% inflation, it doesn’t make much difference but when it gets up to 9.1% when I introduced these bills, the tax incentives are meaningless,” he said. “So we’ve indexed them like your personal exemption, is indexed. … So we’ve got to do the same thing, to encourage people to save.”

He also wants to make the 2017 tax breaks under former President Donald Trump’s administration permanent. His Democratic challenger, Mike Franken, said during an Iowa Press debate that he would repeal those measures. Campaign ads running against Franken say that opposition means he’s in favor of cutting the Child Tax Credit and raising the estate tax.

In a news release, Franken’s campaign called the ad misleading, saying that he did not oppose the Child Tax Credit. The Democrat wants to reform estate taxes so they cannot be used as a “tax dodge for massive inheritances,” according to the release, but has said he would not increase estate taxes for regular Iowans “by one penny.”

“Franken’s tax plan will lower costs for working Iowans, while ensuring the wealthy and large corporations pay their fair share to strengthen our economy, improve our infrastructure, and create better schools,” C.J. Petersen, communications director for Franken for Iowa said in a statement.

Candidates spar over pandemic aid, infrastructure spending

Incumbent Republican Reps. Ashley Hinson and Mariannette Miller-Meeks voted against the Inflation Reduction Act. They have also emphasized their opposition to Democrat-backed spending programs like the American Rescue Plan and the Build Back Better Program.

If reelected, Hinson said she would work to reduce inflation by stopping “the spending spigot.”

“My first vote will be for new leadership in Washington, D.C., that will respect taxpayers,” Hinson said in an October debate.

But her opponent, Democrat Liz Mathis, says the Republican has praised the benefits of projects funded through the American Rescue Plan despite voting against it. She pointed to a $38 million grant program to improve clean water infrastructure in Iowa that Hinson praised online.

“You can’t have it both ways,” Mathis said to Hinson.

The incumbent Republican said while she was opposed to the spending measures, once approved, “I went to bat for Iowa taxpayers, and I went to bat to make sure those resources came here.”

Aid for struggling families or gas on the ‘inflation fire’?

Democrats are advocating government resources to help Iowans who are struggling with cost increases and a potential surge of unemployment. With inflation reaching record highs, candidates say, government programs are needed to help people shoulder these higher costs.

Democrat Christina Bohannan, running in Iowa’s 1st Congressional District, said people she’s met who are struggling with economic problems need more than just lower taxes to get on stable ground.

“As I go all over Southeast Iowa, I see that people love Iowa, they are working hard, but a lot of them need a little help,” she said during a forum at the Greater Des Moines Partnership.

Bohannan has praised measures like the Inflation Reduction Act and other spending measures passed during the Biden administration for providing help to struggling families and small businesses in Iowa. But her opponent, Miller-Meeks, said she’s skeptical that these spending measures will do anything to reduce inflation or the national deficit.

“I don’t know of government programs that have ever brought in the amount of revenue they say when they raise taxes,” or meet cost expectations when it’s time to pay, Miller-Meeks said during an Iowa Press debate.

Miller-Meeks said much of recent inflation was driven by energy prices, and that steps to combat inflation should start with more domestic energy production, supporting production like the Keystone pipeline in the United States and Iowa’s renewable energy efforts.

Republican Rep. Randy Feenstra also has voted against recent spending measures. His Democratic opponent in the 4th District, Ryan Melton said on Iowa Press that he would have voted for the Inflation Reduction Act despite having problems with the legislation. But the incumbent Republican said the Democrats’ approach to “throw more gasoline on the inflation fire” will not help.

“I cannot support legislation that will destroy our economy, harm small businesses, balloon our $30 trillion debt, and leave future generations with the tab,” Feenstra said in a statement.

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Robin Opsahl
Robin Opsahl

Robin Opsahl is an Iowa Capital Dispatch reporter covering the state Legislature and politics. They have experience covering government, elections and more at media organizations including Roll Call, the Sacramento Bee and the Wausau Daily Herald.