January 12, 2006

Iowa: Vilsack's 2006 "Tax Reform" Agenda

On Tuesday, Iowa Governor Tom Vilsack gave his final "Condition of the State" address. Vilsack's tax proposals are as notable for what they ignore as for what they address.

In a state that has seen interesting and vital debates over property tax reform and flattening the state income tax rates in recent years, Vilsack got through his final shouting-from-the-rafters speech without even uttering the word "tax."

This doesn't mean he avoided fiscal matters entirely, of course: Vilsack does want to make two changes to the tax system, increasing the cigarette tax by 80 cents and hiking the beer tax by 10 cents a gallon (or about 6 cents per six-pack). The cig tax hike would raise $130 million for health care; the beer tax would bring in $7 million for general purposes.
(Vilsack got away with proposing these hikes while avoiding using the dreaded "T word" by calling for "increasing the fees and cost of tobacco products" in his speech, and simply not mentioning the beer tax.)

In the immediate wake of Vilsack's speech, David Yepsen argues that drinking beer is less of a sin than lighting up a cigarette-- and that the case for hiking the Iowa beer tax is less compelling as a result. Whatever the social consequences of beer drinking, Yepsen is correct about one thing-- like the cig tax, a higher beer tax would make Iowa's already-regressive tax system even more so.


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