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Tax cut for working families will boost Iowa economy

The Taylor Report by Sen. Rich Taylor

Mar 26, 2013

Legislative update from Sen. Rich Taylor, from last week’s Legislature. Taylor represents Henry and Lee counties and portions of Washington and Jefferson counties.

The Iowa Senate overwhelmingly approved a tax cut this week that’s good for working families and the Iowa economy.

Senate File 402 is a tax cut for Iowans who pay the highest percentage of their income in state and local taxes, even though they are among the state’s lowest paid workers.

The legislation that we approved Wednesday increases the state’s Earned Income Tax Credit from 7 percent to 20 percent of the federal EITC.

Who will benefit? About 210,000 Iowa families who make less than $45,000 a year. Most are working fulltime and many work more than one job. They are the parents of almost 40 percent of all Iowa kids. More than half of the benefit of this tax cut will go to households with incomes below $20,000 a year — households living in poverty right now.

First signed into law by President Ronald Reagan, the EITC has helped more Americans climb out of poverty than any other single effort. Boosting the EITC is especially important in a state such as Iowa where 20 percent of all children live in poverty.

Studies tell us it is rare for children who grow up in poverty to earn a college degree. We shouldn’t abandon these Iowa kids to a low-skill, low-wage future. They are our future — the future of a high-wage, high-skill, globally competitive Iowa economy.

In addition, if this tax cut becomes law, Iowa communities will receive a $50 million boost in economic activity. Unlike other proposed tax cuts, almost every dollar of this tax cut will be spent locally.

Tax cut for working families will boost Iowa economy

Senate File 402 now goes to the House for consideration.

To contact Sen. Taylor during session, call the Senate Switchboard at 515-281-3371. Otherwise he can be reached at home at 319-931-1568. E-mail him at rich.taylor@legis.iowa.gov.

Taylor is vice-chair of the Agriculture Committee; serves on the Economic Growth, Judiciary, Local Government and Transportation committees, as well as the Justice Systems Budget Subcommittee.



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