Monday, February 7, 2011

Cutting away the fat (tax rates, school funds)

The level of state funding for school districts is a major point of contention this year in the Iowa Legislature. House Republicans last week proposed no increase in funding for 2011-12. Senate Democrats have proposed a 2 percent increase. Gov. Terry Branstad is pushing a two-year budget with no increase in the school funding formula, called allowable growth. Branstad and the House GOP are focusing on passage of an austere budget making deep cuts to many programs because of expected shortfalls due to the use of one-time money during the current year. As a result, they say there are no additional funds available for K-12 schools. The short supply of cash hasn't gotten in the way of their tax-cutting agenda, though. Branstad proposed cutting the corporate income tax in half. A plan to cut individual income taxes by 20 percent across the board has moved forward in the Republican-controlled House. But it turns out that cutting taxes while claiming large budget reductions are necessary is not as crazy as it sounds. You see, the extra money incorporated and unicorporated citizens get to keep will stimulate economic growth and job creation (thus, producing more tax revenue). On the other hand, the education boondogle that the state's trapped in does nothing but suck up more money every year. With no apparent taxpayer benefit, it's unreasonable to give school districts more to deal with inflation, higher insurance costs and salary increases. Maybe schools should try something innovative and incorporate.

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