Tax Me More Funds

 A major challenge lawmakers face when debating fiscal policy changes is the argument from the tax-and-spend crowd that they are not paying enough in taxes. One useful tool for fiscally conservative lawmakers to challenge this claim, whether there are tax increases or tax cuts on the table, is the Tax Me More Fund. 

The Origins of the Tax Me More Fund

Massachusetts, specifically the taxpayer group Citizens for Limited Taxation (CLT) was a leader in developing a tax me more fund proposal in 2000-2001 (although Gov. Huckabee created the AR fund before it was approved in MA). After succeeding in reducing income taxes in a 2000 referendum, the Voluntary Optional Tax Endowment (VOTE) was a way for opponents to voluntarily pay at the old rate. The  legislature added a checkbox on its state tax forms in 2001 that allows the taxpayer to decide which tax rate he wants to pay: 5.3% or 5.85%

State Tax Me More Funds

There are currently at least eight states that have accounts available for voluntary contributions from taxpayers. The fact that these funds remain fairly dry is indicative of the hypocrisy on the part of those calling for higher taxes. While big spenders are more than willing to talk the talk, one glance at the states’ tax me more funds reveals that talk, unlike government spending, is cheap.  

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Federal Legislation: The Put Your Money Where Your Mouth Is Act

The idea has caught on at the federal level, too. U.S. Representative John Campbell on April 10, 2008 introduced the "Put Your Money Where Your Mouth Is Act" (H.R. 5783), which is modeled after the existing state Tax Me More Fund in Massachusetts. It would amend the tax code to allow individuals to make voluntary donations to the federal government above their normal tax liability, and, like Massachusetts, would place an additional line on the income tax form that would make it easier for taxpayers to contribute if they feel they're paying too little in taxes.