Senate Democrats are proposing $14 million in tax relief for low-income Iowans.
The plan would raise the refundable “Earned Income Tax Credit” Iowans may receive. That state credit is currently set at seven percent of what a taxpayer claims at the federal level. It would go up to 10 percent under the Senate Democrats’ plan.
“The Earned Income Tax Credit is a program that rewards working people that have a hard time making ends meet,” says Senator Joe Bolkcom, a Democrat from Iowa City who is chair of the Senate Ways & Means Committee. “…We think it’ll boost families and help families that really struggle at lower-wage jobs.”
Many Iowans who claim the Earned Income Tax Credit earn so little that they’re able to completely erase their tax liability by claiming the credit. “It really provides just an amazing amount of help to families that have incomes under $20,000 a year,” Bolkcom says. “The single most important program in the country to help people out of poverty.”
According to Bolkcom, about 131,000 Iowa households have annual incomes below $20,000.
Governor Branstad has proposed cutting the state’s corporate income tax rate in half and his fellow Republicans in the House have proposed a 20-percent, across-the-board cut in income tax rates for individual Iowans. Bolkcom says the G.O.P. is pursuing an “irresponsible path” and Democrats have different priorities.
“We believe that this tax proposal on the Earned Income Tax Credit puts money where it needs to be by giving a tax cut, really, to the hardest-working people at the lowest incomes in the state,” Bolkcom says.
Next week, the Senate Ways and Means Committee is scheduled to consider a bill that outlines the $14 million tax break for low wage-earners.