In 1987, President Ronald Reagan outlined an Economic Bill of Rights. Reagan argued that “without economic freedom there can be no political freedom.” It is important to remember that property is not just physical ground or possessions an individual owns, but it also is our wages and earnings. When governments, at all levels, tax and spend, they are taking economic property away from individuals.
The Iowa Legislature should consider protecting taxpayers by not only implementing tax relief that lowers rates, but also provides protections for taxpayers. Perhaps the best way for the Legislature to protect the interests of taxpayers is to consider a tax and expenditure limitation measure. Several states have some form of tax and expenditure limitation in law or mandated by the state constitution.
Iowa has an expenditure limitation where the Legislature cannot spend more than 99 percent of estimated revenue. During the last legislative session, the Iowa Senate passed Senate Joint Resolution 9, which would strengthen the 99 percent requirement. This resolution, if passed by the Legislature, would have to be considered by the voters as a constitutional amendment.
In addition to limiting expenditures, a constitutional amendment requiring a supermajority vote of the Legislature to raise taxes provides further protection to Iowa taxpayers. The purpose of a supermajority requirement is to make it more difficult for legislatures to increase taxes. Iowa has considered in the past, and almost passed, a constitutional amendment that would have required a three-fifths majority vote of the Legislature to raise taxes, but the voters rejected this amendment.
Tax and expenditure limitations are policy tools aimed at protecting the interests of the taxpayer, while also keeping spending and taxes under control. These measures are not just for state government, but also can be applied to local government. The Texas Public Policy Foundation argues that Texas’ “constitutional spending limit should be expanded to include expenditures made by all political subdivisions of the state.” This means counties, cities, school districts and other local government entities.
Although tax and expenditure limits can help protect taxpayers by keeping spending levels lower and making it more difficult to raise taxes, the ballot also can be used by taxpayers to protect their interests. Taxpayers have the opportunity to vote on fiscal issues that will affect local taxes, but the question needs to be asked whether all taxpayers are represented. In this case, individuals who may own property in a county or locality, but may not have residency. Some states have addressed this issue by allowing non-residents to vote in specific elections that affect property taxes.
Policymakers should remember the wisdom of President Calvin Coolidge: “Realizing that the power to tax is the power to destroy, and that the power to take a certain amount of property or income is only another way of saying that for a certain portion of his time a citizen must work for the government, the authority to impose a tax on the people has been most carefully guarded.”
• John Hendrickson is a policy analyst with Iowans for Tax Relief