Posted tagged ‘Terry Branstad’

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EITC boost would help families who need it — and economy

January 17, 2013
Heather Gibney, Research Associate

Heather Gibney

If you imagine a packed Kinnick Stadium on game day you have an idea of how many Iowans were kept out of poverty from 2009 to 2011 thanks to two refundable tax credits.

A new state-by-state analysis from the Brookings Institution finds that the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 71,123 Iowans out of poverty, over half of them children.

The Governor’s Condition of the State speech Tuesday missed an opportunity to discuss the value of Iowa’s own Earned Income Tax Credit (EITC) to Iowa families and prospects for an expansion — something he has twice vetoed on grounds that he wanted more comprehensive tax reforms.

The Brookings analysis uses a new way of looking at poverty: the Supplemental Poverty Measure, an updated approach to the calculation of whether an Americans household is in poverty. So it’s a valuable look that we haven’t seen for state-level figures.

The EITC is designed to encourage work when low-income jobs don’t provide enough for a family to make ends meet. So, as a family earns more income, they become eligible for a larger credit; as their income approaches self-sufficiency the EITC gradually phases out.[1]

At the state level, Iowa families who are eligible for the federal EITC also qualify for the state EITC, which is set at 7 percent of the federal credit. Proposals in the past would take that higher, to 10 percent or even 20 percent. It can be an important break for lower-income working families because Iowa already taxes the income of many who don’t earn enough to pay federal income tax. Currently, a married couple with two incomes and two children who qualifies for the federal EITC doesn’t have to start paying federal income taxes until their incomes reach $45,400. That same family would have to pay Iowa income taxes when their incomes reached $22,600.[2]

The EITC is the the nation’s largest and most successful anti-poverty program, largely because it encourages and rewards working families. With Iowa’s 85th General Assembly under way, discussions about raising Iowa’s EITC above 7 percent may once again emerge after lawmakers failed to reach an agreement last year.

An EITC increase would raise the threshold at which Iowa families start to owe income taxes — putting more money into the pockets of those who need it the most and encouraging them to spend that money in their local communities.

Posted by Heather Gibney, Research Associate

Categories: Budget and Tax, Economic Opportunity, Organization
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Digging a little deeper on Iowa jobs

January 16, 2013
Colin Gordon

Colin Gordon

Governor Branstad’s claim that Iowa’s economy has created 100,000 jobs in two years is nonsense. We make this case in this morning’s Des Moines Register, pointing out that the Governor’s measure counts (and miscounts at that) only one side of the ledger. The actual jobs record since January 2011 is a net of 18,700 nonfarm jobs.

Here are a couple of graphs to underscore this point. The first traces the trajectory of job creation in Iowa, the West North Central States, the entire Midwest, and the country as a whole. These are plotted with a common starting point: December 2007 (the start of the recession) is set at “100” for each measure, so that each line shows the percentage change in employment over time. The Branstad Administration (since January 2011) is shaded in yellow.

What jumps out here is a simple fact. There is nothing exceptional about the Iowa experience. Our job numbers closely track national and regional trends, although — as with the rest of the West North Central Region — insulation from the housing crash and high commodity prices cushioned us from the full impact of the recession. And the rate at which we are adding jobs (much too slowly) is virtually identical to that of the region and the nation.

Figure 1. Iowa Job Trends Follow Regional and National Trends

Basic RGB

What about the actual job creation record in Iowa? Figure 2 below plots the month-by-month gains (and losses) in nonfarm jobs since December 2007. Again, the period since January 2011 — the focus of the Governor’s claims — is shaded in yellow. Over that 22-month span, we gained jobs in 14 months and lost jobs in the other eight—for a net gain of 18,700 jobs, or about 850 jobs per month. There is nothing exceptional about this. Indeed, in the year preceding the current administration (January 2010 to January 2011) we added about 13,000 nonfarm jobs — over 1,000 per month.

Figure 2. Iowa Jobs Both Gain and Fall Over Last Two Years

Basic RGB

Posted by Colin Gordon, Senior Research Associate

Categories: Economic Opportunity, Organization
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Scrap the political math

January 16, 2013

At the Iowa Policy Project, we are pretty careful about the way we count. The way we use numbers reflects on our credibility as an independent, nonpartisan resource for all Iowans, no matter their political stripe. It is important for our state’s political debates to be fought on a foundation of facts, so that our leaders can better debate the issues on their merits, rather than political spin. That is why we’re here at the Iowa Policy Project.

We also have counted since our earliest days on the work of Colin Gordon, a professor of history at the University of Iowa and IPP’s senior research consultant. Colin is author of our annual State of Working Iowa report — he offered an innovative twist on it this year with interactive graphs that you can try out for yourself at www.stateofworkingiowa.org — and like the rest of us at IPP, he was disturbed to see Iowa job data being distorted in recent days by, of all sources, the Governor’s Office. The Governor in his Condition of the State address Tuesday used an inflated number to tout progress on Iowa jobs. He is choosing to count only jobs gained, not those lost. This is political math, not real math.

Gordon wrote about it today in The Des Moines Register. In the piece, Gordon notes that using the Governor’s approach to math, Iowa could have a $6 billion surplus. “Why not just count the revenues?” he asked. Excerpt:

And, of course, the governor’s political opponents could offer up a number of “gross jobs lost” since January 2011 — a measure (about 56,000 lost jobs) that would be just as impressive, and just as silly. …

In the bigger picture, these job numbers are not even shaped much by state policy, by what governors do or do not do. Jobs are won or lost by national economic conditions. States can try to pirate jobs or investment from other states, but the only sustained impact of state policy is on the quality of state jobs. Higher labor standards and better investments in education are places to make that impact.

Iowa’s leaders can move these discussions forward constructively, but that starts with ending the politicization of basic economic data, as the governor’s staff has done with numbers on job growth.

Posted by Mike Owen

Categories: Economic Opportunity, Organization
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Who would take Governor’s deal?

July 4, 2012
Mike Owen

Mike Owen

There’s a little gamesmanship about public-worker benefits this week that is avoiding a critical question: How will the state compensate workers for giving up negotiated health benefits?

Governor Branstad on Monday repeated his plans to push for a 20 percent premium contribution by state employees in the next contract, putting out a pledge to pay that amount himself right now. For the Governor it’s $224 per month.

IPP’s Andrew Cannon has done a good job of exposing the fact that public worker health benefits in Iowa, while more generous than those offered in the private sector, don’t make up for lower pay in comparable positions or positions requiring comparable qualifications/education. On balance, there is a penalty for working in the public sector.

Governor Branstad doesn’t talk about the wages/salary side. He is ignoring the fact that, unlike his pay and that of state legislators, state employees’ benefits in place are a result of bargaining — a point acknowledged far too little, but thankfully was cited this week by the Muscatine Journal’s Steve Jameson. State employees agreed on the pay levels they receive in the context of other benefitsthey al so receive.

Oddly, when the Governor says state workers should pay $1,000 toward their health insurance, he is peddling it all as savings to the state. Actually, we should expect salaries to go up to compensate for lost benefits.

Also, why are state employees the Governor’s target? Revenues are up, and the Governor is happily giving away millions to companies that don’t pay income tax, and leaving corporate tax loopholes open as well. So explain again, please: Why should state workers take a $1,000 pay cut?

Who would take that deal?

By Mike Owen, Assistant Director

Categories: Budget and Tax, Economic Opportunity, Organization
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