Advocates for the working poor are calling on state lawmakers to increase a tax credit provided to low-income Iowa families. Larry Davis is a volunteer with the United Way of Central Iowa and offers free tax preparation services for low-income Iowans. He wants the state legislature to increase the Earned Income Tax Credit (EITC).
Currently, Iowa contributes a 7% match of the Federal Earned Income Tax Credit. Davis says the average Federal Earned Income Tax Credit in Iowa this past tax season was about $2,000. That means the 7% match provided qualified Iowans with a $140 return.
“That’s a significant amount of money. It represents a weeks worth of groceries for folks, but increasing it to 20-percent would triple that amount and make a meaningful difference in the lives of these folks who are struggling to survive on the earnings they do have,” Davis said. He spoke at a statehouse news conference today organized by several groups that want the EITC raised to 20%.
Davis said the average annual earnings of the clients he serves is under $19,000. Davis said those individuals and families use the EITC to purchase necessities and pay bills. “This is a lifeline to these folks. There isn’t a single one of them that ever said they were going to take this money and buy a big screen TV or take a vacation,” Davis said. “These folks are thinking about the basic necessities like catching up on utility bills and paying off credit card debt.”
Lana Ross is executive director of the Iowa Community Action Association, which provides assistance to low-income families in all 99 Iowa counties. She said many Iowans who qualify for the EITC use the money to buy beds, clothes, shoes or diapers for their children.
“These are the things that most of us take for granted,” Ross said. “But, families who would benefit from an increase in the Earned Income Tax Credit see these as basic needs and something that they want for their children.”
Last year, the Iowa Legislature approved a hike in the EITC from 7% to 10%. Governor Branstad vetoed the measure saying he wanted to pursue “comprehensive” tax reform that would spur job creation.
Today, the governor’s spokesperson – Tim Albrecht – issued the following statement in reaction to the request for an increase in the EITC to 20-percent: “Governor Branstad will review any proposal before coming to a final decision. The governor looks forward to focusing on job creation in the upcoming legislative session and will support any policy that creates jobs in Iowa. The governor has not made a final decision with regard to the Earned Income Tax Credit.”