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Persuaded by one side in the ongoing national debate about universal basic income (UBI), the Iowa Legislature has passed a bill to ban such initiatives at the local level. Observers following the growing interest in federalist experimentation with guaranteed income programs can move another state to the opposition column. 

During the COVID-19 pandemic, states and local governments received an unprecedent windfall of federal dollars, and policymakers seized upon the funding for experiments to address poverty. With a need to spend unexpected money, officials added new variations to the list of guaranteed income programs that have been proposed throughout American history. 

Whether revolutionary Thomas Paine’s writings about the need for a guaranteed income, Senator Huey “Kingfish” Long’s “Share the Wealth,” Milton Friedman’s negative income tax, or Andrew Yang’s “Freedom Dividend,” UBI proposals have been introduced across the political spectrum as a solution for financial insecurity. Seeking innovative approaches to address poverty, local governments have recently intensified the debate. In Iowa, for example, several cities in the Des Moines metro area (Polk County) launched UpLift, a UBI pilot program, with a total cost of $2.65 million

One of the first local programs in the country appeared in Stockton, California, and the idea quickly expanded when Mayors for a Guaranteed Income was founded in 2020, followed by Counties for a Guaranteed Income in 2023. More than 150 guaranteed income pilot programs have popped up across the country, and at least 70 are currently active across 25 states. At the state level, the Minnesota legislature is currently considering a UBI program. 

UBI proponents argue it offers a promising means of alleviating financial insecurity and promoting stability with minimal economic distortion. Critics cite concerns about funding, sustainability, and unintended consequences on workforce participation. Some advocates address these concerns by proposing UBI as a complete replacement for existing programs. Skeptics respond that this is wishful thinking, insisting UBI would become another costly entitlement program.  

Evidence from the COVID era and its inflationary aftermath is not encouraging. During the pandemic, generous direct stimulus payments from the federal government kept many individuals from working, and businesses continue to struggle to find workers to this day. The resulting upward pressure on worker pay, combined with the flood of money, has driven prices toward the sky. A UBI could make these effects permanent, to some extent. 

UBI programs also exacerbate budgetary strains, especially in local government, where property taxes are the main funding source. Backers of UBI programs lean on the fact recent experiments were merely pilot programs funded with one-time money, but the point of a pilot is to set a path for a full policy. Once UBIs become permanent, they will put massive pressure on budgets whether funded at the state or local level. 

With the impact of pandemic-era programs at the top of their minds, Iowa lawmakers felt compelled to respond to UBI programs commencing at the local level. Iowa State Senator Scott Webster has argued there is “ no way property tax dollars would ever be able to hold up these types of programs and [legislators are] fearful some towns would think they could.” Iowa has the tenth-highest property taxes nationwide, and legislators are reluctant to allow any new programs that could increase the burden on homeowners.

Iowa’s legislation, recently signed into law by Governor Kim Reynolds, prohibits local governments from implementing their own UBI programs and joins Iowa with a group of conservative states that have taken recent action. Idaho Governor Brad Little signed a bill in late March prohibiting counties, cities, agencies, boards, and any other political subdivision of the state from administering basic income programs. South Dakota lawmakers enacted a similar piece of legislation, as did their Arizona counterparts, although that attempt fell to the veto pen of Governor Katie Hobbs. The legislatures of Illinois and Mississippi have also considered preemption policies.

The solution for reducing poverty does not reside in UBI programs; government-run poverty programs do not have a history of success. President Lyndon B. Johnson’s Great Society “war on poverty,” as a case in point, was a failure. During the 1990s, many Republican governors demonstrated the best path to reduced welfare is the ready availability of jobs, which shrinks welfare rolls. That is, the best approach to creating financial security and reducing poverty is economic opportunity. 

Like socialism, UBI offers only a false hope of financial security. Iowa has become a national leader in pro-growth fiscal policies that are unleashing Iowans’ drive and ingenuity. Reducing tax and regulatory burdens while ensuring workers are not hindered by restrictive occupational licensing requirements is a policy that encourages economic growth. Declining the UBI experiment prevents a socialist fantasy from strangling this genuine hope. 

Sarah Curry serves as Research Director and John Hendrickson serves as policy director for Iowans for Tax Relief Foundation.

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