That Was The Plan
It happened again late last week…reporting by the Associated Press that left a bit to be desired, to put it mildly.
Here’s the first sentence of the story: “A state panel says Iowa’s economy continues to perform well with record tax receipts for the fiscal year that ended in June, but tax policies enacted by lawmakers will slow the revenue growth in the coming years.”
That sounds like a horrible thing for those nasty lawmakers to have done. But it’s actually exactly what was not only anticipated, but intended.
The idea was that if state budget surpluses got to a certain level, then tax rates would drop because—wait for it—we don’t need all that money…that’s why it’s called a surplus. So record tax receipts this year means lower rates in a future year…and therefore, less revenue. Still a surplus, just less of one.
Revenue in the last fiscal year was up 11 percent…but will drop by 2.7 percent in the next fiscal year because the legislature decided to return money to citizens through lower rates instead of gobbling up every dime that is received and funneling it into even larger and more bloated government programs.
Businesses that have more money have the chance to create more jobs, if they can find workers, and invest in infrastructure that cements the company’s place in the Iowa community. Governments that have more money and spend it cannot sustain the new spending level unless they tax more…because government does not create wealth, it only takes wealth.
What a diabolical thing, for lawmakers to enact changes that brings in less unneeded revenue. I suppose if you are a “government is the answer” advocate, it is. But if you are instead like most citizens, you’re properly wondering why we can’t drop those rates more. Because it works.
