Iowa Republicans Plan To Eliminate Pre-School, Use Budget Surplus To Cut Corporate Taxes

As Kevin Donohue noted this week, several states are reacting to their budget disasters by raising taxes on their low-income residents, while simultaneously crafting giveaways and tax credits for corporations. Michigan, for instance, is cutting its earned income tax credit while implementing business tax breaks that will cost the state $3.3 billion dollars.

In Iowa, though, it’s not low-income taxpayers that are winding up on the wrong end of tax policy — it’s pre-schoolers. As’s Megan Cottrell reported, Iowa’s Republican legislature is fast-tracking a bill that would eliminate the state’s pre-school program, while spending the state’s budget surplus on $300 million on tax breaks, potentially including Gov.-elect Terry Branstad’s (R) desired 50 percent cut in the corporate income tax:

Dozens of people spoke in opposition Tuesday to a fast-moving Republican bill that would eliminate Iowa’s voluntary preschool program, cut family-planning services and direct an estimated $300 million in current-year budget surplus to tax breaks instead of balancing the coming budget…House Appropriations Chairman Scott Raecker, R-Urbandale, argued that it’s appropriate to use the estimated $318 million in surplus in this year’s budget for tax breaks. Gov.-elect Terry Branstad has said he wants to cut corporate income tax rates in half and reduce commercial property taxes by 40 percent.

“This is a bad bill that is focused on denying preschool to 20,000 Iowa kids,” said state Rep. Tyler Olson (D). And it shows an incredibly short-sighted economic vision, as early childhood education is one of the best investments that government can make.


Conservative projections show that the real fiscal rate of return on public early education investments is about 10 percent. The Center on Children and Families has found that investments in pre-school not only boost GDP, but pay for themselves in the long-term. And these numbers aren’t surprising: better-educated people are more productive, less likely to require public assistance, commit fewer crimes, and find better-paying jobs, and therefore make more money and pay more in taxes.

Here’s Federal Reserve Chairman Ben Bernanke saying that even within constrained state budgets, early education investments are more than worthwhile:

The payoffs of early childhood programs can be especially high. For instance, investment in preschool programs for disadvantaged children has been shown to increase high school graduation rates. Because high school graduates have higher earnings, pay more taxes, and are less likely to need to use public health programs, such investments can pay off even from the narrow perspective of state budgets; of course, the returns to the overall economy and to the individuals themselves are much greater.

As Albert Wat, state policy analyst at Pre-K Now, wrote, pre-school investment “is built upon a solid research base, which shows that quality pre-k makes the most of children’s crucial early brain development, meets their social and educational needs, and gives them a strong foundation for school and life.” But Iowa’s GOP seems to believe that its tax dollars would be better spent lavishing tax breaks onto businesses.