President Calvin Coolidge regarded “a good budget as among the most noblest monuments of virtue.” Coolidge noted that a purpose of government was “securing greater efficiency in government by the application of the principles of the constructive economy, in order that there may be a reduction of the burden of taxation now borne by the American people. The object sought is not merely a cutting down of public expenditures. That is only the means. Tax reduction is the end.” For Coolidge, economy in government was not just policy, it was principle.
“Safe-Sane-Steady” was one of the campaign slogans used by President Calvin Coolidge during the 1924 presidential campaign. It also reflected Coolidge’s policies, and his landslide victory in the election demonstrated that the American people agreed. “Safe-Sane-Steady” can be applied to Governor Kim Reynolds.
Since entering office, whether it is fiscal or social policy, Governor Reynolds has pushed for common-sense conservative policies that place families and taxpayers first. Iowans agreed, and they have not only reelected Governor Reynolds twice but also expanded the Republican majority in the legislature each time. Once a “independent” state politically, Governor Reynolds has shifted the Hawkeye state in a more Republican direction.
Throughout her time in office, Reynolds has placed a priority on fiscal conservatism and making Iowa’s economy more competitive through tax reform, reducing the size and scope of government, and limiting the regulatory burden.
The governor has also been described as America’s “Margaret Thatcher.” She has not only defended the taxpayer but also opposed the progressive notion that government spending drives economic growth.
Reynolds has received numerous honors for her fiscal prudence, including the Distinguished Service Award from the Tax Foundation and the Linda S. Weindruch Award from the Iowa Taxpayers Association. She was also named a public official of the year by Governing magazine and twice recognized by the Cato Institute as the most fiscally conservative governor in the nation.
“When I first took office in 2017, Iowa’s top income tax rate was 8.98 percent, among the nation’s highest. So was our 12 percent corporate tax rate. Those taxes weren’t just numbers on a page. They were eating into paychecks, increasing the cost of doing business, and quietly making life more expensive for Iowa families. So, we took bold, decisive action,” stated Reynolds in her 2026 Condition of the State Address, reflecting on Iowa’s historic income tax reform.
Reynolds is in the process of concluding her final legislative session. Since 2017, she has led Iowa as a fiscal conservative. In 2022, the legislature passed the most significant reform of all, eliminating the multi-rate progressive income tax and replacing it with a single flat tax. That reform was accelerated in 2024, when lawmakers moved up the full phase-in and reduced the rate further — from 3.9 percent to 3.8 percent, which was fully implemented in 2025.
In just seven years, Iowa went from an income tax rate of nearly 9 percent to a flat 3.8 percent, representing a 60 percent reduction in the top rate. Iowa has since become a leader in the state “flat tax revolution,” with 14 states now operating under flat income tax systems.
Before these reforms, Iowa’s tax climate ranked among the worst in the nation, as reflected in the Tax Foundation’s State Business Tax Climate Index. Since then, Iowa has climbed an impressive 27 spots — from 44th to 17th — in the Tax Foundation’s 2026 State Tax Competitiveness Index. Our state has even been recognized as leading the nation in tax cuts during the 21st century. “I’m proud to say, we’ve cut taxes more than any other state in the country,” proclaimed Reynolds.
Reducing tax rates is not just about economics or policy; it is about freedom, opportunity, and allowing individuals the ability to keep more of their hard-earned dollars. “That’s more than just a number, a ranking, or a percentage. It means more room in the budget for groceries. For school supplies. For a tank of gas, it means saving more, instead of falling a little further behind,” stated Governor Reynolds in describing the importance of Iowa’s flat tax.
Further, the governor stated that “in Iowa, we believe the money you earn is better used for your family than your government.”
Iowa’s flat tax did not emerge overnight. Its origins trace back to the passage of the federal Tax Cuts and Jobs Act (TCJA) in 2017, which catalyzed tax reform efforts across the states. In Iowa, that momentum translated into a renewed focus on income tax reform, beginning with a package of tax cuts passed in 2018.
At the time, Iowa’s tax climate was deeply uncompetitive. The state imposed a progressive individual income tax with a top rate of 8.98 percent and a corporate income tax rate of 12 percent, which was the highest in the nation. The 2018 tax reform package, the first major overhaul of Iowa’s income tax system in two decades, marked the beginning of a sustained reform effort. It cut rates across the board and modernized the tax code by broadening the sales tax base, a change that helped stabilize revenues and reduced reliance on income taxes.
Over the next several years, lawmakers built on that foundation. Reforms included phasing down the corporate income tax to a flat 5.5 percent, eliminating the inheritance tax, and addressing property tax pressures. Each step followed the same principle: lower rates, a broader base, and disciplined spending.
Iowa’s tax reforms were made possible not by gimmicks or temporary surpluses, but by sustained fiscal discipline and conservative budgeting. Prudent budgeting is at the heart of sound fiscal policy.
“Not every state is doing this or even can because of poor budgeting and runaway spending,” stated Reynolds in describing some of Iowa’s neighbors, such as Minnesota and Illinois. These states, among others, have done the opposite of Iowa, that is, they have repeatedly increased taxes and spending.
As a result of conservative budgeting, Iowa emerged out of the COVID pandemic as one of the stronger economies and fiscal foundations. Since Reynolds has been in office, Iowa has been running budget surpluses, the reserve accounts have been full, and the Taxpayer Relief Fund has a $4 billion balance.
Reynolds also understands that conservative budgeting is the foundation of sustainable tax reform. “But it’s not enough just to cut taxes. You have to make them sustainable, especially if you want to keep bringing them down. The growth they create helps, but you also have to keep spending in check,” argues Reynolds. This is a lesson many states and the federal government have yet to learn.
Fiscal conservatism is not just about pro-growth tax reform — it must also include limiting spending and reducing the size of government. This is why the governor has made reforming government a priority.
As part of her fiscal policy agenda, she was able to get the legislature to approve two major government reorganization measures. This was the first effort to reform state government in 40 years. The first reform measure centered on consolidating and reducing departments within the executive branch, while the second focused on reducing and consolidating the number of boards and commissions.
“When we started our alignment work in 2022, state operations hadn’t been reviewed in forty years — and it showed. Layers of bureaucracy had accumulated over decades, expanding government beyond its core function, keeping us from working effectively as one team, and hampering our service to Iowans. We were too big, too fractured, and too inefficient,” stated Reynolds.
Both government reform measures worked to limit government and improve service delivery. “We’ve transformed the way our State interacts with citizens, businesses, and entrepreneurs,” Reynolds explained. “We consolidated agencies (from 37 to 16), eliminated 1,200 burdensome regulations, remade legacy systems, centralized programs, and leveraged technology.” These reforms have already saved taxpayers $217 million, exceeding original projections within the first 18 months.
Before the reform, Iowa had 256 boards and commissions; now, 83 have been eliminated, and others consolidated. In initiating this reform, Governor Reynolds asked fundamental questions that all policymakers should consider at every level of government:
“What is the core mission of each agency? How is it funded? How is it staffed and what does it own? Are the agency’s programs working? How did the structure of the agency compare to other states? Where is there duplication or misalignment? What can we cut? These questions align with the principles of priority-based budgeting.”
Governor Reynolds stated, “Like any large organization, government is marked by bureaucracy’s natural tendency to grow. If that growth isn’t constantly checked and rechanneled toward its core function, it quickly takes on a life of its own.”
Fiscal policy has been a central part of Governor Reynolds’ agenda: “We reduced taxes — saving Iowans more than $24 billion over 10 years. No more tax on retirement income. No inheritance tax. And starting this month [January 2025], Iowans get to keep even more of the money they earn, with a 3.8 percent flat tax — a far cry from the 8.98 percent of six years ago.”
The governor also launched Iowa’s DOGE task force, modeled after her efforts to reform state government. “I like to say that we were doing DOGE before DOGE was a thing,” stated Reynolds.
Working throughout 2025, the DOGE taskforce had a unique task of not just trying to find taxpayer savings at the state level, but more importantly focus on reforming local government. The reason for the focus on cities and counties is Iowa’s escalating property tax burden.
She noted that “over the last two years, property taxes have gone up more than 10 percent.” However, this has been a problem that has only accelerated. Over the past 20 years, property taxes in Iowa have increased by over 107 percent, which exceeds the growth of inflation and population.
“Whether you live in a small town, growing suburb, or an urban neighborhood, you’ve probably felt it. Property taxes are rising faster than inflation, faster than paychecks, and faster than population growth,” she stated.
Although Iowa has made tremendous progress on income tax reform and on making the tax code more competitive, property taxes are still a deterrent to growth. “As we’re seeing property taxes escalating, people are leaving rural Iowa because they can’t afford to stay,” she argued.
Iowa’s 3.8 percent flat tax is not only making the tax code more competitive, but it is also attracting more investment into Iowa. “Today, the momentum is real. Despite a challenging global economy, we’ve attracted over $20 billion in new capital investment since 2024, creating new jobs and new opportunities,” stated Governor Reynolds.
The high property tax burden is impacting economic growth, especially in rural Iowa. Property tax relief is essential to reversing this trend. “That’s part of the equation, too. We need to hopefully grow the population in rural Iowa,” noted Governor Reynolds.
Reynolds defined the cause of Iowa’s property tax problem and the solution. “So, this year, we need to go after the real driver of the problem: Spending. Spending is what drives taxes — always has, always will. And the most reliable way to protect taxpayers is to limit the growth of government itself,” stated Reynolds.
For that reason, the starting point for any sound tax policy discussion must be spending restraint. Governor Reynolds is calling for a 2 percent property tax cap, which would allow for new construction to be included. Once again, she is correct that government spending is the direct cause of Iowa’s property tax problem.
She hopes to conclude her final legislative session with a property tax reform measure that will finally begin to provide property tax relief for Iowans. She also had the goal of eliminating Iowa’s income tax; however, because of the national economic situation, she will not be able to fulfill that goal.
Nevertheless, Reynolds is already the most significant governor in Iowa’s history to fully engage and implement conservative fiscal policy. As governor, she also reflected the spirit of Coolidge in fighting for the preservation of traditional values and the rule of law. Whether it was through the COVID pandemic or natural disasters, the governor always made sure to protect the liberties of Iowans. In an era when states are addicted to federal funds, Governor Reynolds tried to advocate for greater state flexibility in terms of funding or outright refusing funds.
Governor Reynolds reflected the values of Coolidge. In our current era, when fiscal conservatives are increasingly rare, she has demonstrated that it is possible to govern successfully on a platform of “economy in government.”
READ MORE from John Hendrickson:
Iowa Does Not Need ‘Revolutionary’ Election Changes That Violate Voters’ Associational Rights
John Hendrickson serves as Policy Director for Iowans for Tax Relief Foundation.
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