Subsidize something and you’ll get more of it. Tax it and you’ll get less. That’s Economics 101. It’s not surprising that nearly three years after Colorado voters approved a ballot measure to subsidize free lunches for all students, regardless of parental income, utilization rates are higher than proponents expected, and the program is coming up short on funding.
Proponents of the free lunch program sold voters on the ballot initiative by promising to tax the rich for it. They reduced a tax credit available to those making more $300,000 and used the money to pay for school meals. They said that would be enough.
As it turns out, a free meal is hard to pass up. Why take time to make a lunch or breakfast when someone else is buying? More families signed their children up for lunches and breakfasts than was forecast. The program fell short $56 million in the first year, and the legislature had to make up the funding.
This year, experts expect the program to come up $27 million short. Rather than admit the mistake, Democrats have decided to milk taxpayers a little more. They introduced House Bill 1274, which would place two questions before the voters come November. The first would ask if the state could keep $26 million that would it otherwise be returned in Taxpayer’s Bill of Rights refunds to taxpayers making over $300,000. The second would cap deductions for the same taxpayers at $1,000. The measure is expected to raise $95 million a year.
Tax the rich so that middle-income and wealthy kids can eat for “free” at school. That’s not exactly a lesson in self-reliance. Young kids cannot help but absorb the lesson that food comes from the government not their parents. Perhaps that’s the point.
With any luck, some families can avoid meal preparation altogether. The legislature is also floating a bill to allow Supplemental Nutrition Assistance Program recipients to use food stamps to go out to eat. That’s hardly fair to taxpayers who pay for these benefits through their taxes and are struggling to make ends meet themselves. It also means food stamps will not stretch as far since restaurant-prepared meals cost more than home-cooked meals.
Whether at school or a restaurant, the legislature is encouraging people to eat out on other people’s dime and if the adage holds, they’ll do more of it.
Will diners be able to use food stamps to cover the proposed 20% surcharge Mayor Mike Johnston is encouraging on restaurant bills? Among these ideas, Johnston’s proposal is actually a good one. No, he isn’t proposing adding a mandatory 20% surcharge on top of taxes and tips as some supposed. He’s suggesting lowering taxes on surcharges charged in lieu of tips as some restaurants do.
Not everyone likes the idea. Some servers resent having their tips pooled and spread around, effectively reducing their take-home pay. Some diners want the discretion to tip according to the quality of the service. The idea is worth discussing, however, since it means more restaurant workers will keep more of the money they have earned.
There is no such thing as a free lunch.
Krista L. Kafer is a weekly Denver Post columnist. Follow her on Twitter: @kristakafer.
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