Democrat Governor Tom Vilsack opposes a Republican-crafted plan to sock away more state tax money in savings accounts to serve as a fall-back should state tax revenues decline.Vilsack says there are tremendous needs in education, health care and public safety which belie the notion the state can afford to put another one-percent of state tax revenues in savings. Vilsack says it’s wrong to say the additional savings would protect against future across-the-board cuts; he says it is instead a cut because it reduces the amount of money the state can spend this year. Vilsack says the Republicans’ “rhetoric may say one thing but the reality of their proposals says something else.” He says Republicans are scouring state government for extra pots of money, and is an indication it is time to raise taxes to solve the budget dilemma. Vilsack says a sluggish economy, a “jobless” recover and “fairly aggressive” state tax cuts over the past nine years have reduced state tax revenue, and he says time and attention should be focused on how to improve the tax-flow to state coffers. On a related matter, Vilsack has appointed a panel of 11 financial gurus from the business, government and academic worlds to try to more accurately predict state tax revenues. Bad guesses over the past few years have forced significant budget cuts in the middle of the state fiscal year. Vilsack says the Council will also make recommendations about steps the state can take to improve the economy, and how to improve the way in which state government calculates information about state budgets in the future. On the tax issue — Governor Vilsack says the reason he didn’t propose expanding the state sales tax to legal services is because people accused of a crime have a constitutional right to a lawyer. He says there is some question as to whether you can tax a constitutional right.He says the legislature can take it up if they want to.Critics of the Governor’s tax proposals have accused him of not suggesting legal fees should be taxed because he is a lawyer and received campaign contributions from trial lawyers. Sales tax is currently charged on takeout food, but not other food items, and some have suggested some legal services could be subject to tax, but not when the clients involved in a court case. Vilsack says it is “conceivable” that such distinctions could be made, but he wants to wait ’til the State Supreme Court rules on a gambling case before he “goes too far down that road.” The case in question involves a dispute over whether the state can levy a higher tax on the state’s race tracks than on its riverboat casinos.
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