A tax-cutting wave is sweeping over America’s states

Iowa isaccustomed to the national political spotlight as the first state that Republican hopefuls vie to win when seeking their party’s nomination for the White House. What is more unusual is that this small midwestern state now also finds itself in the national economic spotlight. For conservative politicians and commentators, Iowa has emerged as America’s tax-cutting champion, a paragon of fiscal responsibility. To critics it looks more like an example of economic recklessness.Either way, Iowa is playing an outsized role in a bigger debate about how American states ought to manage their revenues and spending. Until a few years ago it had one of the highest income-tax rates in America. By 2026 it will be down to a flat tax of 3.9%, with designs on more cuts. “Ultimately I’d like to get as close to zero as I can,” says Kim Reynolds, Iowa’s hard-driving governor. Iowa is far from alone. Some 25 states, from Arizona to New Hampshire, have cut individual income taxes over the past three years. A handful, including Georgia and Idaho, are shifting to a flat tax. And a few others such as Arkansas and Mississippi want to eliminate their income taxes altogether, joining the likes of Florida and Texas which have none.