Look Out for the Tax Swap

The Iowa House this week passed a historical property tax reform bill with decreases in both commercial and residential property tax rates. Their plan entails:

Every Iowan receives tax relief and there is no shifting of burdens to any one class of property
Job creators receive a $602 million property tax cut
Homeowners receive a $417 million property tax cut

Senate Democrats seem ready to deal which concerns me. Because it seems like we have a gas tax on the horizon with average gas prices in Iowa at $3.45 per gallon. So when Iowa Senate Majority Leader Mike Gronstal (D-Council Bluffs) says he’s ready to deal I can’t help but think a gas tax increase may be on the horizon.

This week a five member House panel passed a bill which would raise the gas tax eight cents per gallon by 2014. It would also increase the taxes paid on car purchase from 5% to 6%. The Senate Transportation Committee voted in favor of a gas tax hike of 10 cents per gallon by 2014. Half of that increase, if the bill becomes law, would be implemented next year.

I can see some House and Senate Republicans get talked into passing a gas tax because of the property tax cuts. I know the argument goes that we need the money for road improvement, etc. Those who rationalize it are being incredibly shortsighted not to mention they’re not listening to their constituents either.

Sure the state is lowering property taxes, but what is to stop municipal governments from raising property taxes or their more likely strategy of increasing the assessments. Until some major cuts take place in our budget (like cutting universal public preschool) we have zero business raising any type of taxes until proper cuts are done.