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The Conservative Reader:
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The Conservative Reader: Iowa Interview with Representative Kevin Koester (Part 1 of 2)

The Conservative Reader: Iowa Interview with Representative Kevin Koester (Part 1 of 2)

After easily defeating a primary challenger in June, Iowa House member Kevin Koester was kind enough to sit down with The Conservative Reader: Iowa to discuss his upcoming general election in November, as well as the many issues he will be dealing with should he earn a third term in the Iowa Legislature.

The Primary, The General Election, and the Pulse of House District 38

The process of winning re-election for Rep. Koester began even before the legislative session ended, as the first order of business was winning a primary challenge by Saylor Township resident Brett Nelson.  As the session ran long, Koester made several hundred phone calls in his downtime and began getting acquainted with the voters in his newly re-drawn House District 38.

He handily defeated Nelson 456 to 80, and took many positives away from the effort this challenge required, “I’m very grateful for both the margin of victory and for the experience of the primary because it really helped energize my campaign for November, and gave me a great familiarity with the new territory in the district.”  In an interesting aside, after not meeting or speaking to each other throughout the primary, the two have since met and Nelson even took up an offer by Rep. Koester to join him in a weekly bible study—a great, albeit rare, good ending to a primary challenge.

Talking to voters throughout this process affirmed to Rep. Koester that the dominant issues for his November show-down with Democrat John Phoenix will include the state budget, government over-spending, and the economy.  Besides these economic issues, the background of the two candidates, combined with the issues still facing the legislature, serve to telegraph the subject matter that will be front and center in this race—education reform and public sector unions.

While Koester has decades of experience with education in Iowa, Phoenix was elected to the Des Moines School Board where he served for six years.  In addition to this, Phoenix also has been a long-time union steward, has already been endorsed by the AFL-CIO, and strongly believes that “unions help make our country stronger and improve the lives of all workers.”

Speaking to these differences, Rep. Koester believes that, “because of his role and his voice on collective bargaining issues and union viewpoints, there will be plenty of distance between us to give the voters a clear choice”.  Given the fact that Mr. Koester is a strong Conservative Republican and Phoenix is a pro-union, former school board member who featured Des Moines super-liberal Ako Abdul-Samad at his first fundraiser—the gulf between the two is likely to be enormous on a long list of issues.  Here is a look at two of these issues, and where Rep. Koester stands on them.

Education Reform

Like most Iowa Republicans, Mr. Koester was very disappointed in the progress made on education reform by the last General Assembly.  “The things we voted on last session were not reforms, they were Band-Aids.  We did not do surgery, and that is what is truly needed.”

After seeing countless specific and detailed proposals get torn apart by the opposing sides, he stands ready to work on a broad frame of reform that can be agreed on in principle and passed.  “What I have is a drive to dismantle the fluff, and no patience for the simple arguments that only serve to attack valid ideas.  We need to stop the nit picking and the warring, and come up with a product and move forward on it.”

Two realities in the current system that he sees as negatively affecting students are the lack of teachers being removed for poor performance and the practice of “last in first out”, which is the seniority structure that protects long-time teachers from being let go, in favor of removing less tenured teachers when staff sizes are cut.  This practice has long been under fire by Republicans because it refuses to take into account the skill level and effectiveness of each teacher.  “Last in first out is bad for kids.  We need to look at who is performing and have that be the prime focus, and not necessarily just who has the most experience.  A pay raise needs to be given for performing better, not just given out for coming back the next year and being a year older”.

In terms of the reforms needed to reverse our recent embarrassing trend in education, the crucial ingredient in Rep. Koester’s view is to quantify the performance of the employees in our education system.  He will not support any proposal without this component, and he concisely summed up his position on education by saying:

We will have meaningful and fundamental reform when we agree on how we are going to measure student learning, how we are going to measure each of our Principal’s leadership and influence in the classroom, and how we are going to measure teachers and instruction.  That is where the rubber meets the road on this issue.

Unions and Collective Bargaining

With Governor Branstad recently signaling a desire to look at their financial impact on the state, and John Phoenix’s close personal ties to them, there is little doubt that public sector unions and collective bargaining will be hotly debated in this race.

Rep. Koester has already taken several votes on this issue, all with the goal of bringing public sector unions more in line with the realities of the private sector, and attempting to prevent the payouts involved from breaking the bank as we have seen in several other states in recent years.

The votes he has taken include voting three times for employees of the Legislative branch, including himself, to pay a portion of their health insurance cost.  The first was for a contribution of $50 a month, the second for a $100 a month, and the third for $200 a month.  “I have gone on record every opportunity I have had insisting that Legislators are charged something, and I strongly believe that all state employees should help pay for the cost of their health insurance.”

He also voted in favor of the measure that went into effect July 1st, which changed the formula for calculating retirement benefits for state employees.  In the past payouts were figured using an average of an employee’s top three wage earning years, which has now been changed to take the average of the top five years.

In the larger picture, he supports having a policy ensuring that the number of government employees does not swell beyond what is needed and can be financially sustained in the long run.  To this end he favors implementing breaks on the growth of state government that ties the number of workers and salaries to the overall growth of our state economy, and prioritizes the issue the following way:

I want to start with how we plan for how many state jobs there will be.  You don’t grow the economy by growing the number of public jobs—that is socialism.  The second thing is then addressing the disproportions in the health insurance contributions and the retirement benefits.  The benefits are out of control compared to what the private sector is doing, and to what Iowa taxpayers are doing to take care of their families.  We need to get those things in line, and what is fair for the rest of Iowans should be fair for the public employees that they are paying for.

Next Stop: November

Anyone who talks issues with Rep. Koester immediately realizes that he has a deep grasp on nearly all of them, including all the moving parts involved with each.  On substance, he can go toe-to-toe with anyone and will shine in the public forums and debates with Mr. Phoenix.

As this contest slowly unfolds till November, the topics these two candidates debate along the way will be a roll call of every major issue facing the citizens of Iowa.  In particular, the colliding ideologies on taxes, education, and public sector unions will be a true foreshadowing of the debates that will consume the next General Assembly.

How strong a candidate John Phoenix will be remains to be seen, but Republicans throughout Iowa and HD 38 can be assured that Kevin Koester is up to the challenge—and will remain a strong Conservative voice for the Party in the coming years.

 

 

The Costs of Obamacare

The Costs of Obamacare

Following the Supreme Court ruling upholding The Affordable Care Act, the financial fallout for the American people must be re-highlighted.  We will have political analysis in the coming days, but for now here are the facts regarding the tax implications of this law

Comprehensive List of Tax Hikes in Obamacare

 

Individual Mandate Excise Tax(Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 + 2.5% AGI/$695 2.5% AGI/$1390 2.5% AGI/$2085

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS)

Employer Mandate Tax(Jan 2014):  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees.  This provision applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).

Combined score of individual and employer mandate tax penalty: $65 billion/10 years

Surtax on Investment Income ($123 billion/Jan. 2013):  This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).  This would result in the following top tax rates on investment income

Capital Gains Dividends Other*
2010-2012 15% 15% 35%
2013+ (current law) 23.8% 43.4% 43.4%
2013+ (Obama budget) 23.8% 23.8% 43.4%
*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens.

Excise Tax on Comprehensive Health Insurance Plans($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family).  CPI +1 percentage point indexed.

Hike in Medicare Payroll Tax($86.8 bil/Jan 2013): Current law and changes:

First $200,000 ($250,000 Married) Employer/Employee All Remaining Wages Employer/Employee
Current Law 1.45%/1.45% 2.9% self-employed 1.45%/1.45% 2.9% self-employed
Obamacare Tax Hike 1.45%/1.45% 2.9% self-employed 1.45%/2.35% 3.8% self-employed

Medicine Cabinet Tax($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)

HSA Withdrawal Tax Hike($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Flexible Spending Account Cap – aka“Special Needs Kids Tax”($13 bil/Jan 2013): Imposes cap of $2500 (Indexed to inflation after 2013) on FSAs (now unlimited). . There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

Tax on Medical Device Manufacturers($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exemptions include items retailing for less than $100.

Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI; it is waived for 65+ taxpayers in 2013-2016 only.

Tax on Indoor Tanning Services($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons

Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D($4.5 bil/Jan 2013)

Blue Cross/Blue Shield Tax Hike($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services

Excise Tax on Charitable Hospitals(Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS

Tax on Innovator Drug Companies($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Health Insurers($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.

$500,000 Annual Executive Compensation Limit for Health Insurance Executives($0.6 bil/Jan 2013)

Employer Reporting of Insurance on W-2(Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

Corporate 1099-MISC Information Reporting($17.1 bil/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

“Black liquor” tax hike(Tax hike of $23.6 billion).  This is a tax increase on a type of bio-fuel.

Codification of the “economic substance doctrine”(Tax hike of $4.5 billion).  This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.


 

Senator Joe Bolkcom’s Political Theater Reveals Utter Disregard For Iowa Taxpayers

Senator Joe Bolkcom’s Political Theater Reveals Utter Disregard For Iowa Taxpayers

Perhaps no issue better illustrates the philosophical divide between left-wing Democrats and right-wing Republicans than the Earned Income Tax Credit.  Here in Iowa a theatrical stunt a few weeks back by ultra-Liberal Iowa City Democrat Senator Joe Bolkcom put the issue front and center.  In the hopes of pressuring Governor Branstad to support a huge increase in the Iowa Earned Income Tax Credit, Pleasantville resident Julie Heck was brought in to symbolize the need for this action by taking part in a press conference before then testifying in front of the Ways and Means Committee.  Ms. Heck is a single mother of three who is currently receiving the Iowa Earned Income Tax credit, and on this day set about making the case that while she is glad to have it—it sure would be nice to get more of our money.

While Democrats were no doubt tickled by both the media exposure and the perceived effectiveness of this spectacle, the realities surrounding her specific situation, including her own stunning words, expose the utter disregard that liberal Democrats have for all Iowa taxpayers.

The Press Conference

In the press conference Ms. Heck says that she is a single mother of three who works full time and attends college full time at Simpson.  She made $33,000 in income last year.  Beyond not paying a penny in Federal income tax, she instead received a $5,279 check from the Federal government which combined $2,279 from the Federal E.I.T.C and another $3,000 from the Federal Child Tax Credit.  Receiving the Federal E.I.T.C  in turn qualified her to receive an additional $160 from the Iowa E.I.T.C.  Without getting into all the numbers, after using a portion of her Federal refund to pay the $410 she owed to the state of Iowa, she ended up not only with a zero dollar income tax burden, but instead was actually paid $4,869 by the government.

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While so much is wrong with this picture, two things are particularly disturbing.  Firstly, instead of being grateful to live in a system that allows her to receive a net profit of $4,869 from the income tax code, she actually had the audacity to sit in front of a microphone and decry the fact that she had to pay any Iowa income taxes at all.  And, remarkably unsatisfied with what she has already received, she wants even more money—it is just unbelievable.

Perhaps the biggest slap in the face here is what she admits to spending some of this refund money on.  At the 3 minute mark of the video posted above, she plainly states that she is using her Federal “refund” money to help pay for her college tuition, and then proceeds to say that some of this money also goes to match the funds her children manage to save throughout the year.

As a taxpayer who over the last two years alone has sent tens of thousands of dollars to the Federal government and several thousand more to the state of Iowa, I find these details outrageous.  Let me be clear, I have no problem paying taxes to help those who are destitute, starving, or un-sheltered.  However, paying for a mother of three who decides that she now wants to attend college full time is a far different matter.

Once any American citizen makes the decision to bring three human lives into the world it is solely their own responsibility to provide for those children by any means necessary.   In this case it clearly means working a second job to provide for her family instead of spending our tax dollars to attend college.  I ask you this, how many hundreds of thousands of Iowans, especially small business owners, send their money into the government each year and afterwards do not have enough left over to afford schooling, or to match their children’s savings?

The Politics and Implications

Finally we have Sen. Bolkcom, the Iowa personification of this entitlement mentality, and the political and financial implications of this situation.  After Ms. Heck’s statement  Sen. Bolkcom threatens (at the 7:20 mark) that until the “earned” income tax credit is brought up from its current 7% to either 13% or 20%, that in his mind all tax relief for Iowans is off the table.  Realize here what this man is actually saying.  That before he entertains any legislation to cut the taxes of Iowans who have been throttled by actually paying high taxes for years—Ms. Heck must first receive an even larger refund.

This attitude and approach are stunning.  Putting on display a woman who makes $33,000 a year, who attends college fulltime, and already receives nearly $5,000 in government money through the tax code to justify almost tripling the Iowa E.I.T.C is beyond insulting.  This clearly shows all taxpayers in Iowa what little respect some have for the contributions we are making to government coffers every year.

Republicans agreed multiple times last year to increase the percentage of the Iowa E.I.T.C, largely as part of a legislative give and take they hoped would result in other tax proposals gaining passage, but the governor twice vetoed the section raising the credit.  In explanation he cited his desire to instead include it in a much larger tax reform bill, though the Senate again last month passed it as a stand alone measure (SF 2161).  The price tag of raising the credit to 20% would cost Iowa taxpayers $49.9 million every year after it fully phased-in in 2016.  This is no doubt a number that seems tiny to Democrats, but is a big deal when you consider that Chief Justice Cady is likely to again be denied an additional $10 million in funding for our judicial system, which has been underfunded for decades.

Once again I stress that the root of my problem here is not so much the issue itself or the price tag of passing the increase.  Above all else, this specific example exposes how we are losing the spirit of defiant self-sufficiency that we once had—and how quickly it is getting replaced with an attitude that instead asks ‘what more can you do for me?’  What is so galling about this is not that the government would offer assistance to people in serious need (they certainly should), but rather how that need is now defined.

While this entire production was likely staged with the sole purpose of raising the guilt level and putting public pressure on Governor Branstad to accept the increase, in reality what it raises is a much larger question:

Has the mentality throughout our state become so collectivist in nature that hard working Iowans are going to be viewed as “heartless” for not wanting to pay adults to go to college and be able to match their children’s piggy bank contributions?

If the answer is yes than Conservatives and Libertarians have a lot more work to do…and Iowans will have a lot more taxes to pay in the future.

Has The Tea Party Wave In Iowa Crested?

Has The Tea Party Wave In Iowa Crested?

The year was 2010.  In Iowa, like in the rest of the Country, a reaction to the obscene growth in size and spending at all levels of government boiled into a loud and visible public movement.  The internet was a buzz, local Tea Party chapters were springing up, and the Iowa Capitol was the site of several well attended rallies expressing the sentiment of less government and lower taxes.  Two years later, it is time to ask the question—what results have come of this?

The short answer at the state level here in Iowa is—not too much so far.

Most will argue that more patience is required—and they are right.  Many will cite a variety of reasons that explain the lack of great action—some valid points to be sure.  Meanwhile, the more optimistic in the movement will point to some victories—and I grant that they have a case.

All this considered, it is hard not to be disappointed with the lack of impact Tea Party ideals have had on Iowa’s legislative process.  Let’s take a brief look at the landscape.

Victories So Far 

Probably the biggest achievement Republicans at the State House can point to is drastically slowing the pace of growth in the annual budget.  It would likely shock most Iowans to know that the total appropriations made by our legislature in the year 2002 was $4.375 billion dollars, less than a decade later (FY 2011) the amount spent had jumped to $5.8 billion, an indefensible increase of 33% in less than a decade.  Though slightly more money has been spent in each of the last few years, getting a handle on this expansion was not necessarily a given, and for this kudos are well deserved.

The problem here of course is baseline budgeting.  The ridiculous increases seen from 2002-2011 have now been built into future budgets—with next year’s expenditure and all projected future years being amounts in excess of $6 billion per year.  The reality is that Iowans, of either political party, who are holding their breath for a significant decrease in their taxes can expect two things—a blue-ish hue followed by a funeral.  The simple fact is that while future tax hikes can be avoided, as long as the legislature is spending over $6 billion a year—your taxes are not significantly going down.

Other victories that can be pointed to will be met by fiscal purists with justifiable skepticism, the formation of the Property Tax Relief Fund and 0% allowable growth for education in 2012.  Time will tell, but the Property Tax Relief Fund may end up being yet another technocratic “victory” in the legislative shell game.  I may be wrong, but I can tell you from experience that digging down into the details of many proposed reforms and tax cuts often end up being more of an exercise in moving money around than anything else.  In terms of the achievement of 0% allowable growth, this was gained in exchange for 2% growth in 2013 and could be completely erased if an already proposed 4% growth rate in 2014 is green lighted.  For the record, approving a 4% increase in education spending would directly cost taxpayers another $196.2 million.

The Reasons

There are many factors that account for this lack of action, and they make it blatantly unfair to directly blame our fiscally Conservative legislators for not achieving sweeping change.

Chief among these is the narrow, but iron fisted, control spend-happy Democrats have in the Iowa Senate.  Pragmatically speaking, one could argue it doesn’t make much sense to propose large initiatives that are effectively dead on arrival in the Senate.  In addition to this it is hard to get movement in these areas when one of the major players, the governor, is not fully on board.  Let’s face it, while he is undoubtedly a strong Republican—he isn’t exactly going to be caffeinating any bodies of water under the cover of darkness any time soon.

Realistically the most valid reason is the predetermined circumstances surrounding this session.  All the oxygen is being consumed by the massively involved efforts left over from last session, which include preventing built-in tax increases, re-structuring mental health services, and a flailing attempt at education reform.  A final thing that deserves mention is that they have been put on defense by having to block a continuing parade of costly bills introduced by the Democrats most Liberal wing.  Stay tuned as The Conservative Reader: Iowa will be posting an analysis of these proposals in the near future.

Some Boldness Would Suffice

I think that most Tea Party supporters in Iowa have, so far, looked at the variety of factors in play and given a pass to the fiscal-hawk wing of our legislature.  Most of us are reasonable in our expectations and we realize that big political results are hard to come by.  That being said, the time to at least start articulating a vision and making the case that real tax cuts will only follow real spending cuts is at hand.  At this point we are not even demanding deliverables—even some boldness would suffice.

An example of this boldness has been displayed recently by Sen. Brad Zaun, and everyone in the movement should take the time to drop him a note of moral support.  Knowing that it would not even survive funnel week, Sen. Zaun proposed a bold bill that contains a future vision of education in Iowa that is worth fighting for.  Directly following this session other Tea Party leaning members would be wise to start following suit.  It is their job to start constructing an agenda and a platform that can eventually cut taxes by cutting spending.

So, has the Tea Party Movement in Iowa crested?

While it is fair to reserve final judgment on this, the lack of real legislative results proves at the minimum it has receded.  As of right now the Tea Party trajectory in Iowa closely resembles the illegal immigration outrage that came to a National boil in early 2008—a huge movement that has delivered small victories along the way before largely fading.

After providing the weight for the water displacement which created the wave in 2010, many fiscally concerned Iowans are standing on the shore in 2012 with only soggy ankles.  I suspect that the political energy needed to make the case statewide for smaller government is still readily available.  What is needed at this point is a tightly formed caucus with a vision supported by pieces of actual legislation.

Without brave and principled leadership this movement cannot be sustained…we will be watching.

84th General Assembly: Preview of Coverage

84th General Assembly: Preview of Coverage

The gaveling in of the Iowa Legislature’s 84th General Assembly last week signaled an end to the 2012 Presidential Caucus season and the return of a more local political focus for Iowans.

There is no doubt that much of the session’s oxygen will be sucked up by the major issues that failed to produce any legislation following last year’s battles. These issues include reforming the tax code, mental health services, and education, as well as another round of sparring over Iowa setting up a health insurance exchange to work in conjunction with Obama Care.

While these will grab a majority of the headlines, and a good share of our attention here at The Conservative Reader: Iowa, there have already been a number of very interesting bills introduced that we will also be following.

As of now the bills and issues outside “the big 4” that we have flagged to watch closely are as follows: Term limits, random drug testing for recipients 84th of certain state benefits, banning red light and speed cameras, and the fate of nuclear power in Iowa.

After being deluged for so many months with candidates and their ever changing poll numbers, it is easy to forget that in many ways the caucus season is an imperfect method for measuring Iowa’s current ideological perspective. Removing the factors attached to individual candidates such as “likeability” and “electability”, and instead gauging the debate and the public reaction of Iowans to more hyper-local issues is a far more telling indicator of where we stand. Ironically these debates and their results likely will tip our hand as to which Presidential candidate will be awarded our 6 electoral votes in November.

In the following weeks stay tuned for investigations, updates, analysis, and opinions on the major issues being debated at the State House. As mentioned earlier, while we will not ignore the most publicized topics of debate this session, a number of bills that will exist in the shadows of the major priorities are just as important.

Though we will be closely watching with an appropriate level of skepticism, we wish all those involved with the 84th General Assembly well in their efforts to make improvements for all Iowans. When we feel they have achieved improvement—we will trumpet it. When we feel they have caused damage to our way of life—they will be called to account.

On with Democracy…

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