Tax cuts are coming. For the Iowans who didn’t want their taxes cut, relief may soon be on the way.
Congress passed its tax overhaul late last year, with an expected savings of $2,000 for an average family of four. However, some complain they don’t want a tax cut amid growing government debt and dwindling government services. Instead, they say they want pay more.
In one case, hundreds of wealthy Americans signed a letter last year asking Congress not to reduce taxes, organized by left-wing groups United for a Fair Economy and Voices for Progress.
“We call on Congress to raise our taxes to bring in additional much-needed revenue and to restore investments to vital services. Doing so will help create jobs, strengthen the middle class, and ensure America’s economic success. Under no circumstance should tax reform lose revenue, especially to provide tax cuts to the wealthy and corporations,” the millionaires and billionaires wrote.
If the wealthy really want to pay more, some Republican lawmakers want to let them.
A Republican-sponsored proposal in the Iowa Legislature this year would allow Iowans to voluntarily pay more through their income tax returns. House File 2033 requires the Iowa Department of Revenue to place voluntary contribution fields on tax forms. Taxpayers could select up to five state funds to support with their money.
Similarly, the federal government already invites taxpayers to make voluntary contributions “from individuals wishing to express their patriotism to the United States.” Gifts can either be unconditional, or earmarked to pay down the public debt. The latter totaled just $2.6 million last year, an insignificant portion of the debt.
Giving pro-tax Americans the option to pay more is at least somewhat tongue-in-cheek policymaking, rather than a legitimate source of revenue. Proponents’ goal is to expose the perceived hypocrisy in rich people asking for higher taxes, without being willing to pay up voluntarily.
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Yet the state government is facing a very real multimillion dollar budget shortage this year. Tax revenues have repeatedly fallen below forecast in recent years, but the Republican governor and legislative leaders have no appetite for raising taxes.
Policymakers have another option for inviting the public to chip in a little extra for their government services. They’re called fees, and opportunities abound.
As a few examples, Iowa Department of Natural Resources leaders asked at their latest annual budget hearing to increase licensing rates and implement dynamic pricing on campsites; students at the state’s public universities are expected to see tuition hikes in coming years; and many local governments, like mine in Iowa City, plan to raise utility rates.
Fee hikes are criticized by the left and the right. Liberals worry they disproportionately impact low-income people, while conservatives see them as just another government revenue increase.
However, fees may be the least bad option to raise needed revenue. I hope the Iowans who value those services will be happy to pay more.
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