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A regressive tax during a recession? No way

BY DI EDITORIAL BOARD | MAY 04, 2009 7:26 AM

Just months after the end of the longest presidential election season ever, voters will head back to the polls Tuesday to cast ballots regarding a local-option sales tax. The tax, if passed, would make sales tax 7 percent, up from 6 percent. That money would be used to make infrastructure improvements related to flood recovery or prevention in Johnson County.

While there are great arguments in support of that new tax, we can’t bring ourselves to support a regressive tax — a tax which puts disproportional burden on low-income citizens — during such a severe recession.

A year and half ago, locals were faced with the option of passing a different sales tax to benefit school-infrastructure improvements. At the time, advocates of the tax told us our schools would crumble and would become grossly overcrowded if the tax didn’t pass. So voters passed the tax.

And in the last election, Johnson County voters were given the option of raising property taxes so the county could buy up land for conservation. Proponents of that tax hike insisted the move would be integral to preserving clean air and water. Again, voters showed up in favor of the tax increase.

Now, proponents of the newest local-option sales tax tell us the 1 cent sales tax increase is necessary to protect Iowa City in the event of future floods. City officials have plans for three major projects: elevate Park Road bridge, which acted as a dam during last summer’s flood; raise Dubuque Street so it will act as a flood barrier; and move the North Wastewater Treatment Plant, which flooded last summer, contaminating water downstream.

Surely, all of those projects make sense. However, it isn’t clear that those projects have to be done so hastily. The Iowa River creeps close to — or on to — Dubuque Street even in normal years. Similarly, even in dry years, the water level in the river nears the bottom of the Park Road bridge. So why hasn’t there been such a significant push in favor of the projects before? The fact that we have lived with these infrastructure shortfalls for so long is clear evidence that these projects are not immediately urgent.

Sure, these projects would be nice, and they shouldn’t be scrapped altogether. But they should not come at the cost of higher taxes, especially during a recession. Retailers and consumers alike are already suffering from the recession; higher sales tax will certainly not help. Some argue Iowa City’s economy is resilient enough to handle the blow of additional taxes. However, UI President Sally Mason’s announcement last week that the university will likely have to cut “several hundred” positions makes the recession suddenly seem very real and very near.

Additionally, there are more urgent needs localities should address — a fire station on the North Side of Iowa City and a new Johnson County Justice Center, for instance.

But if communities in the area are still so adamant about these projects, they should trim budgets and look elsewhere for funds. Local governments must do what many citizens are already doing by cutting out the “wants” in favor of funding the “needs.”

To be clear, we sympathize with a community which was ravaged by the flood last summer, and we support measures which would responsibly protect against future floods. However, more taxes and more spending just aren’t plausible during such economic hardship.

Johnson County taxpayers have been taxed enough. It’s time for voters to speak out against taxation by casting their ballots against higher taxes.


‘Yes’ crowd pushes for tax

• If the sales tax doesn’t pass, local governments could be forced to raise property taxes in order to pay for flood projects. While almost all citizens pay sales tax, only property owners (and most renters) pay property tax.

• While the sales tax is regressive — it puts disproportional burden on low-income citizens — sales tax here doesn’t apply to such basic necessities as food and most medicines.

• As much as 25 percent of the tax will be paid by people who live outside the area but shop here.

• Funds generated by the tax can be used to leverage additional funding from the federal government.

Source: Sue Dvorsky, Yes For All

‘Ax’ group reluctant to tax

• Projects aren’t fiscally responsible or totally necessary. Communities could be over-reacting after last summer’s flood.

• The North Side of Iowa City is partially or nearly flooded every year. It doesn’t make sense that these projects only now so urgent.

• A sales tax is regressive and would put undue burden on low-income citizens.

• There’s lots of frivolous spending in Iowa City that should be cut before higher taxes are implemented.

Source: Deborah Thornton, Ax the Tax


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