|
Op-Ed:
Reject the 'Blue' state model
[The Center Square] John Hendrickson |
Tax Education Foundation
A recent editorial by the
Des Moines Register asks whether the push for "smaller" government in
Iowa has achieved a point where it is "too small to work." The editorial
argues that those who believe in a "smaller, more efficient" government
fail to address how limited government can solve some of the policy
problems confronting Iowa. In other words, the Register's editorial
contends that Gov. Kim Reynolds and the Republican-led legislature have
hollowed out government by controlling the growth of spending and
reducing taxes. This argument is not only untrue but ignores the
progressive "big government" record of failure. |
|
 As a result of prudent budgeting, Iowa's fiscal house had a
solid foundation as the COVID-19 pandemic hit. Currently, Iowa has a budget
surplus, the reserves are full, and revenues continue to grow. If Iowa followed
similar tax and spend policies as our neighbors in Illinois or other progressive
"Blue" states such as New York or California, our fiscal house would not have
been able to withstand the economic recession triggered by the pandemic.
High individual and corporate income tax rates are not only harmful, but they
deter economic growth. To make Iowa's economy more competitive, Governor
Reynolds and the Republican legislature passed a tax reform measure in 2018 that
lowered both the individual and corporate tax rates.
Iowa's high tax rates must be reduced. Iowa competes with other states for both
jobs and people. Projections from the Census show states without an income tax
or with low tax rates are gaining people. Montana, which recently passed a
conservative budget and lowered its income tax, will gain one seat in Congress.
In contrast, an exodus is occurring from high tax states such as New York and
California.
In addition to lowering Iowa's tax rates, the governor and the legislature have
been prudent with state spending. This does not mean that spending has declined.
From 2013 to 2020, Iowa's budget has grown 1.6 times faster than population
growth plus inflation. Last year's budget (FY 2021), which was passed during the
pandemic, was considered a "status quo" budget with spending only slightly
greater than the previous year. This is hardly austerity-style budgeting.
Gov. Reynolds and Republican legislators have also made
workforce development and education major priorities. Since 2011, Iowa has
"invested nearly $1 billion" in public education. If policymakers want to spend
more money on areas such as public safety and the justice system, then reform
will need to occur in the two largest areas of the budget: education and
Medicaid (the Department of Human Services). In 1995, spending on those two
programs consumed 47 percent of the budget. Today, it is over 75 percent.
[ to
top of second column] |
Discussions can be had about increasing funding for
various programs, but government needs to remember the money they
are spending comes from taxpayers. Every day, households and
businesses prioritize spending. Government should be held to the
same standard. Progressives often argue that government needs to
spend or "invest" more, but they fail to acknowledge how much
spending should increase and whose taxes should be increased to
generate the required revenue.
Spending more money and hiring more government employees does not
necessarily translate into better public policy. As an example,
North Carolina has followed a policy of fiscal conservatism: "Since
2011, North Carolina legislators have kept government growth in
check even as they increased spending on teacher pay and Medicaid.
They have cut taxes and built-up healthy reserves to get through
natural disasters and economic recessions. People and jobs have come
to North Carolina in response, leading to faster economic growth,"
wrote Joseph Coletti, a senior fellow who specializes in fiscal
policy at the John Locke Foundation.
Governments cannot tax and spend their way to
prosperity. Iowa should look to other states such as North Carolina,
Utah and Florida that demonstrate fiscal conservatism works. Iowa
does not want to become another Illinois or California.
President Ronald Reagan once said, "Well, the trouble with our
liberal friends is not that they're ignorant; it's just that they
know so much that isn't so." This statement applies to the “Blue”
state policy model.
John Hendrickson serves as policy director for Tax
Education Foundation, a public policy think tank
Click here to respond to the editor about this article
 |
