After reviewing real estate in Utah, an Iowa couple was shocked at Utah’s low property taxes and said, “Iowa should do everything Utah does!” They are right. Iowa should fix its broken property tax system with the solution that has worked in Utah for nearly four decades – Truth-in-Taxation.

Utah is a state governed by fiscal conservatism and is a national leader as an example of pro-growth economic policies. Iowa has also implemented conservative tax policies, most recently the largest tax cut in state history.

Under Governor Kim Reynolds, Iowa has also pledged to budget prudently and control spending. However, Iowa’s property taxes are out of control, while Utah has the most taxpayer-friendly property tax law in the nation. Utah’s Truth in Taxation Act is the gold standard for property tax reform.

The Tax Foundation’s 2022 State Corporate Tax Climate Index ranks Utah as the seventh-lowest property tax in the nation, while Iowa is ranked 39th in the nation. Utah’s ranking improved, while Iowa’s fell. High property taxes not only hurt individuals and families, they also discourage economic growth. This is especially true for small businesses, and heavy property taxes can act as a deterrent to entrepreneurs wanting to start a business.

Property Tax Reform Is Difficult in Iowa Because It’s Exclusively a Local Issue In 2019, the Iowa Legislature passed a Property Tax Accountability and Transparency Act. The 2019 law is often referred to as a “truth in taxation” measure and while the measure has increased transparency and accountability, it should not be compared to the Utah law. Utah’s Truth in Taxation Act is considered one of the most taxpayer-friendly property tax laws in the nation. The Truth-in-Taxation Act is an income-based limitation, which means that as assessments go up, property tax rates go down.

Utah’s Truth-in-Taxation law ensures that each taxing entity receives the same property tax revenue as the previous year, including new growth. This prevents local governments from getting a windfall as valuations have risen. Truth-in-Taxation works to prevent local governments from benefiting from increased assessments. If assessments go up by 10%, that doesn’t mean local government budgets should go up by 10%.

If a local government wishes to exceed the certified tax rate, then it requires a tax truth hearing accompanied by an extensive direct notification and public hearing process. Truth in Taxation also requires local government officials to take recorded votes to approve increased tax revenue.

Through the Truth in Taxation process, local governments must justify why they want to raise taxes for additional spending, forcing them to be more transparent about why they need additional tax revenue. A crucial aspect of the Utah law is a direct notification requirement, where notices are sent to taxpayers providing information about the proposed tax increase and the increase in their tax bill. It also includes the date, time and location of the budget hearing on truth in taxation. This extensive public notice and hearing process has been successful, and Utah taxpayers are actively participating in the Truth in Tax Hearings.

Kansas followed Utah’s lead and passed a strict Truth in Taxation law. The law is similar to Utah’s, except new growth is not permitted. Currently, 29 counties are not raising property taxes this year.

Dave Trabert, CEO of the Kansas Policy Institute, describes the law as solving the problem of the “honesty gap” in property taxes. Under Kansas law, each local entity’s factory tax is reduced each year, so new assessments bring in the same amount of property tax dollars. If they want more tax revenue, local officials must notify taxpayers of their intention, hold a public hearing on the proposed increase, and then vote to create a public record.

Just like in Utah, elected officials in Kansas can no longer claim to hold the line on property taxes while reaping big gains from increases in value. This is the crucial element of truth in taxation. By requiring local governments to receive the same amount of revenue as the previous year, it limits spending and if elected officials want to increase spending, they must go through the truth in taxation process. Direct notification offers more clarity and transparency for the taxpayer.

Iowa taxpayers are tired of excuses and want a solution for property tax relief. Truth-in-Taxation is a proven solution that will provide property tax relief to all taxpayers.

John Hendrickson is policy director of the Iowans for Tax Relief Foundation and Rusty Cannon is president of the Utah Taxpayers Association.

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