Do Iowa’s lower-income working families deserve a bigger tax credit from the state?
Related Stories
A Senate panel agreed Monday to provide a bigger state income tax break for working families earning $45,000 a year or less during the 2013 tax year.
The Senate Ways and Means Committee voted 9-5 to boost the earned income tax credit, from the state’s current 7 percent tax credit to 20 percent of the federal tax credit for working poor families after turning back a Republican effort to broaden the break substantially.
Committee chairman Sen. Joe Bolkcom, D-Iowa City, said the 20 percent earned income tax credit contained in Senate File 88 would benefit about 210,000 Iowa households which are home to about 40 percent of the state’s children.
“This bill is what tax relief looks like,” said Bolkcom. “The tax relief is going to people who pay more than their fair share.” The bill’s manager said Iowa has a significant poverty issue and the tax relief targets those working families struggling to make ends meet.
What do you think of the measure? Is it enough? Do Iowa’s lower-income working families deserve a bigger tax credit from the state?
-u20042.png?1366232523)
Yes the lower income families should get a bigger earned tax credit to make up for the cheap wages they are paid because people want to buy stuff for less money at wally world and other stores, restaurants and fast food places, which forces the places to pay lower wages to the workers.
I can approach this issue from the perspective of one who has lived and paid state income tax in 5 states. In CA and VT we had a very progressive income tax structure, more so than in Iowa. In FL we paid no income tax and in MI we paid a flat tax with a relatively large exemption. IA’s tax structure is only moderately progressive. IMO it should be a little more progressive and this change, effectively, helps with that. It’s a good move.
Not sure that I entirely agree with this- tax revenues have to come from some sector of the population, and it is beginning to look like once again the middle class is ultimately going to take the hit and backfill for the revenue shifted away from the “poor” (the “rich” already have their means of minimizing their tax bill).
While this is probably well-meaning, it comes with a couple of unintended consequences: (1) the working poor who get the tax break may come to consider themselves (and be seen by others) as “substandard citizens” who aren’t being asked to contribute their fair (proportionate to their income) tax share; and (2) it will increase resentment against state tax policy by the middle class which must make up for the revenue slack created by the tax break.
More and more, the notion of the Flat Tax is beginning to appeal to me; although I concede that it would never survive the legislative sausage grinder without being corrupted beyond redemption.
As it stands right now a good percentage of the working poor already do not pay income tax and I for one don’t begrudge them one bit for it. It seems to me it would take a mighty small person to resent someone who makes less for getting a tax break.
We have to remember, these people still pay all the other taxes that are out there so they certainly are doing their fair share so there is no reason to even suggest they should feel like second class citizens in any way.
Actually, it takes quite a bit of effort to do the work they do and they should be proud, and we should admire that they keep up the effort even though things haven’t been all that easy.
Don’t think that I used the term “second class citizen”. That implies that the citizens so labeled are being deprived of some civil right- which they are not. I simply feel that codifying unequal treatment is a bad thing in the long run, regardless of whatever pretext on which it is based: financial, religion, race, sex, or sexual preference. And with respect to taxes, in my perfect world everyone would kick into the state coffers an identical proportional amount of their yearly-assessed net worth, be they pauper or billionaire. I’m pretty sure that would aggrieve the billionaires much more than the paupers.
I used the term second class citizens because, to me anyway, it sounds better than substandard citizen. Both terms meaning they are worth less than the rest of us.
Flat taxes, no matter what they are based on, are unfair and those who are clever and have the means will have no problem keeping their tax liability to a minimum.
“Flat taxes, no matter what they are based on, are unfair and those who are clever and have the means will have no problem keeping their tax liability to a minimum.”
Your cynicism about our government being able to create a tax system that is more equitable than the exemption-riddled one that we presently have is understandable. However, since no one has really thought through in detail what functional attributes a flat tax system might need to have to achieve a given revenue objective, it really can’t be accurately described as “unfair”. That seems to be a kneejerk reaction to a tax notion which has, unfortunately, mostly gotten superficial promotion by right-wing presidential candidates.
Lorenz,
Low income Iowans already feel like and are treated like second class citizens. Trust me, a bit more money back at tax time is not going to make them feel any worse
This credit is based on the Earned Income Tax Credit low income people already get from the federal government. Which means these are low income households with qualifying dependents aka children.
As for flat taxes being more fair, you need to review the Parable of the poor woman and the penny
10% of my income is, for me, a big chunk of change. It’s gas money, it’s rent, it’s food. It’s money going toward things I need in order to live.
10% for someone llike Mitt Romney is throw away pocket change of no particular consequence
You tell me how that’s fair.
It would be “fair” if, instead of everyone paying your notional 10% of their income, they instead paid in a much lower rate- say 2 or 3%- made possible because of higher revenue extraction from those at the higher end of the income ladder due to the elimination of tax credits, dodges, and other forms of codified special-interest favoritism.
If, as a low income Iowan, you already “feel like and are treated like a second class citizen”, you have demonstrated the point that I was attempting to make at the start of this thread. You need to explore why you feel that way. It may surprise you to find yourself in agreement with my point.
Lorenz
Did I say I was a low income Iowan. I work with low income Iowans. I think I know how they feel and I can assure you, low income Iowans not feeling good about themselves has nothing to do with taxes
As for me exploring why I feel whatever way you think I feel, how about you exploring why you feel that you have to tell other people how they feel.
As for your 2%-3% flat tax rate for Iowa, the math doesn’t work.
I would like to see a few things play out at the federal level and what consequences those will have on Iowas budget. If those obligations are met then by all means offer young “working” families an additional tax break.
Iowa should do away with the personal income tax all together and raise the sales tax. In Texas (where i am a resident of) – we have no state income tax, tey the state does not operate in the red, they keep the lights on, services haven’t been scuttled…. same as in Florida, and other states without an income tax. you’d think the FEDS could learn something from that…
Before we all move to Texas, we should note that Texas has the highest percentage of people without health insurance in the US, and is dead lowest in percentage of people with a High School education. But we’re glad to hear they keep the lights on.