Will Taxing Additional Services Hurt Iowa’s Economy?


Publication Date: January 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Iris Lav

Research Area: Banking and finance

Keywords: State budgets; State taxes; Economic projections

Type: Report


The Governor’s proposal to expand the base of Iowa’s sales tax to include more business and professional services has drawn fire from some who claim that the expansion would harm businesses and economic growth in the state. Three states, however, have for many years fully taxed services, and evidence from those three states — South Dakota, New Mexico, and Hawaii — call into question the validity of claims of economic harm.