#25 Iowa

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The overall freedom ranking is a combination of personal and economic freedoms.

From 2009

Iowa State Overview

State Facts

Net Migration Rate (?) -1.8 % 
Personal Income Growth (?) 1.58 %
How does the freedom ranking relate to these?


Despite frequently electing federal politicians who do not seem very interested in preserving freedom, Iowa’s policies are fairly freedom-friendly. The state particularly stands out on economic regulation.

On fiscal policy, the state’s rank is mediocre. Taxes (at 9.7 percent of income), government consumption plus subsidies (at 12.3 percent of income), and public employment (at 14.0 percent of private employment) are all slightly higher than average, and on this dimension there has been little change over the last decade. Property, sales, income, and motor vehicle license taxes all fall at least slightly above the national average. Iowa is much better than average, however, on government debt, which is at just 12.9 percent of income—over a standard deviation lower than the national average.

Iowa has a light touch on land-use planning but needs to go further to prohibit private-to-private eminent domain transfers and to place limits on future regulatory takings. Labor regulations are market-friendly, with a right-to-work law, no minimum wage, and a decent workers’ compensation regime. Health insurance mandates are low, but the state loses ground with “prior approval” price controls and rating bands in the non-group and small group markets. Cable and telecom have been deregulated. The court system is very good. Iowa does poorly on the extent of occupational licensing, but generally does well on the other variables in the occupational freedom dimension (for instance, nurse practitioners may practice independently). Life and property/casualty insurance markets are moderately regulated, but the state does have a certificate-of-need (CON) law for new hospital construction.

On personal freedoms, the picture is mixed. A single marijuana offense can carry up to 50 years in prison in Iowa. State alcohol laws are subpar, with a heavy state role in distribution and high effective taxes on spirits. Licensure requirements for private school teachers heavily drag down Iowa’s educational freedom score, along with unusually strict home school standardized-testing and notification requirements. Asset forfeiture needs reform. A comprehensive smoking ban was enacted in the 2007—8 term. On the other hand, most forms of gaming are permitted. The state has not overturned a court decision legalizing same-sex marriage. Incarceration and drug arrest rates are about average.

Policy Recommendations

  • Trim spending on areas where the state spends more than the national average—education, hospitals, highways, and public welfare—and use the savings to trim the aforementioned taxes.
  • Repeal CON requirement for new hospital construction.
  • End private school teacher licensing and relax private school curriculum control. Reduce standardized testing and notification requirements for homeschoolers. These reforms would have allowed Iowa to jump seven places in the personal freedom ranking.
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