In the summer of 1987, President Ronald Reagan outlined what he described as an Economic Bill of Rights. President Reagan argued the principle of the American Founding that “without economic freedom there can be no political freedom.” The principles that President Reagan outlined in his Economic Bill of Rights included:
- The freedom to work.
- The freedom to enjoy the fruits of one’s labor.
- The freedom to own and control one’s property.
- The freedom to participate in a free market.
President Reagan’s Economic Bill of Rights represented both a defense of economic liberty and the need to protect taxpayers by limiting the national government. It is important to remember that property is not just physical ground or possessions that an individual owns, but it is also our wages and earnings. When governments, at all levels tax and spend, they are taking economic property away from individuals.
The Iowa Legislature should also 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 either law or mandated by the state constitution.
Currently, Iowa has an expenditure limitation that where the Legislature cannot spend more than 99 percent of estimated revenue. The objective of this measure is to make sure that the budget remains in balance. 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 narrowly.
Tax and expenditure limitations are policy tools that are 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 can also be applied to local government as well. 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 that counties, cities, school districts, and other local government entities with spending limit “based on the growth rate of state population plus inflation, total state personal income, or total gross state product, whichever is less.”
Although tax and expenditure limits can help to protect taxpayers by keeping spending levels lower and making it more difficult to raise taxes, the ballot can also be used by taxpayers to protect their interests. Taxpayers, especially at the local level, have the opportunity to vote on fiscal issues that will impact 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 may not be able to vote on an issue that will impact their property taxes. Some states have addressed this issue by allowing non-residents to vote in elections. Typically, residential requirements are necessary for participating in elections, but in the case of specific elections dealing with issues impacting property ownership, providing a vote to a non-resident property owner allows them the opportunity to be represented.
It is important for all levels of government to remember that taxation and spending are not just economic issues, but moral issues. As President Calvin Coolidge stated:
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.
By strengthening the expenditure limitation, implementing a supermajority vote requirement by the Legislature to raise taxes, and allow greater representation for taxpayers to protect their interests are all things that the Iowa Legislature can consider to provide greater protection to taxpayers.
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