SHARE:
Policy Points from Iowa Fiscal Partners

Posts tagged CBPP

Data clear: New stimulus needed

Posted July 23rd, 2020 to Blog

As the long-awaited next round of federal aid and stimulus remains mired in political infighting, the hardship in Iowa — and around the country — is acute. As a new report from the Center for Budget and Policy Priorities (CBPP) makes clear, households are struggling to pay for the basics now, and that need will only grow if the $600 per week federal “PUC” boost to unemployment insurance benefits expires as scheduled next week.

The receipt of SNAP (food stamps) is up 14 percent in Iowa since February of this year, but the share of Iowans reporting food insecurity continues to grow. According to the CBPP’s analysis of the Census Bureau’s Household Pulse Survey, 1-in-8 (12 percent) Iowa families with children reported (for the last week of June and first week of July) that their household sometimes or often didn’t have enough to eat in the last seven days.

Housing insecurity is also a growing problem. Iowa set up a small fund with CARES Act funds to provide short-term assistance for those unable to make rent or mortgage payments — but disqualified those receiving PUC benefits from even applying. There is about $20 million left in the fund (out of $22 million) but when the PUC expires next week, the demands on this program will skyrocket. According to CBPP, 1 in 6 Iowa tenants are already behind on their rent.

These hardships will be especially stark for Iowa’s Black and Latino workers and their families. Unemployment rates are persistently higher for workers of color. These workers are disproportionately represented among the front-line and manufacturing (especially meat processing) jobs that have posed a higher risk of exposure to the virus. In the absence of meaningful and enforceable workplace protections, the temporary boost to UI benefits provided something of a refuge. As an administrative judge concluded in approving unemployment compensation for a worker who quit because of safety concerns concluded in one recent UI case, “the working conditions at Tyson were unsafe, intolerable and detrimental, and rose to the level where a reasonable person would feel compelled to quit.” But that option evaporates next week.

All of this hardship would be even worse in the absence of the CARES Act provisions for enhanced unemployment insurance, and increased federal support for SNAP, LIHEAP (Low-Income Home Energy Assistance Program), and other social supports. Iowans are suffering with those programs in place, and they will suffer more if social supports are allowed to return to levels previous to COVID-induced shutdowns.

The latest data on initial unemployment claims, released today, show the persistence of Iowa’s economic woes during the pandemic, with nearly 400,000 filing claims in the last 18 weeks.

It is crucial that, with the virus surging in Iowa and other states and the economy projected to remain weak, that our federal representatives move quickly to enact a stimulus package that continues and expands upon these basic protections. We need an extension of expanded unemployment benefits, more opportunities for paid leave, more federal support for child care, SNAP, and LIHEAP, and robust fiscal relief for states and localities. And it is just as crucial that Governor Reynolds and the Iowa Legislature pass along any discretionary state assistance to those in the most need.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project and a history professor at the University of Iowa.

Time for state to act

Posted March 16th, 2020 to Blog
170118_capitol_170603-4x4The Pelosi-Mnuchin stimulus package that passed the U.S. House on Friday includes many measures to protect ordinary Americans who may see lost wages or who may need to stay away from work because someone in the family needs attention. According to The Washington Post:

“The agreement reached Friday is primarily aimed at expanding the safety net to cope with the potentially catastrophic economic impact of the coronavirus. In addition to ensuring free coronavirus testing, the plan would dramatically increase several benefits, particularly family medical leave and paid sick leave, while also bolstering unemployment insurance; spending on health insurance for the poor; and food programs for children and the elderly.”[1]

The food program expansion “nullifies existing work requirements on the food stamp program.”[2] The medical leave and family leave section will allow up to two-thirds of salary to a great number of employees including full tax credits from employment tax for self-employed individuals.[3] The federal share of Medicaid is boosted and unemployment insurance is strengthened. According to the Center on Budget and Policy Priorities (CBPP), the Medicaid boost means an additional $240 million is available for Iowa.[4] Noted CBPP’s Jennifer Sullivan:

The House COVID-19 bill’s temporary Medicaid funding boost, if in effect for all of calendar year 2020, would deliver roughly $35 billion in immediate, needed relief to states, which will face growing costs due to the virus and a likely economic downturn. … Similar measures have been a critical part of economic stimulus packages under both Democratic and Republican administrations….

The bill, expected to pass the Senate in a few days, addresses what many expect to be a downturn in the economy caused by the pandemic reaching U.S. shores. Responsible actions at the federal level require a state response as well. Iowa Policy Project blog posts in recent days have noted good opportunities: First, Iowa needs improvements in the unemployment system: (1) Relax the job search requirements to enable individuals forced into unemployment by the virus to collect UI benefits; (2) Allow individuals forced to take a leave of absence to collect UI during that period; (3) Establish procedures for individuals losing a job for health safety reasons or to care for a family member with the virus to qualify for UI, and (4) Establish rules under which employers’ unemployment experience rating is not harmed by virus-related layoffs.[5] Second, Iowans need strong Medicaid and SNAP benefits now more than ever. The safety net helps us all — not just current beneficiaries, but also those on the edge of financial security and the general economy. Any legislation, such as SF430 and HF2030, that imposes new bureaucratic hurdles for struggling Iowans not only will take food and doctor’s visits away when people need them the most, but hurt local communities as well.[6] [1] Erica WernerMike DeBonisPaul Kane and. Jeff Stein. The Washington Post, “House passes coronavirus economic relief package with Trump’s support,” March 14, 2020. https://www.washingtonpost.com/us-policy/2020/03/13/paid-leave-democrats-trump-deal-coronavirus/ [2] Ibid [3] H. R. 6201 Making emergency supplemental appropriations for the fiscal year ending September 30, 2020, and for other purposes. Page 93 and 103. https://docs.house.gov/billsthisweek/20200309/BILLS-116hr6201-SUS.pdf [4] Jennifer Sullivan, Center on Budget and Policy Priorities, “Medicaid Funding Boost for States Can’t Wait,” updated March 13, 2020. https://bit.ly/3d1jPBQ [5] Peter Fisher. IowaPolicyPoints.org blog post,Protecting workers from coronavirus impacts.” March 14, 2020. [6] Natalie Veldhouse. IowaPolicyPoints.org blog post, “Make Iowa resilient: Strengthen supports for working families.” March 13, 2020. osterberg_david_095115David Osterberg co-founded the Iowa Policy Project and is a researcher with the organization. dosterberg@iowapolicyproject.org  

AHCA: Shifting Costs to States

FOR IMMEDIATE RELEASE TUESDAY, JUNE 6, 2017

Cutting Medicaid Expansion: Huge Cost Shift to Iowa, Other States

IOWA CITY, Iowa (June 6, 2017) — A new report shows Iowa would have to spend almost three times what it does now to cover low-income adults who would lose health coverage under the House-passed American Health Care Act (AHCA).

To keep up the benefit to those families, AHCA would force Iowa and the 30 other states that expanded Medicaid to absorb a greater share of the cost. The Center on Budget and Policy Priorities (CBPP), estimates the cost to Iowa to rise $192.5 million in 2021.

“This is an enormous cost-shift to Iowa, and we already have seen our state’s leaders cutting back revenues, and trying to cut more. Facing those fiscal constraints already, it is hard to see how the state could pick up those costs, which puts health coverage for many thousands of Iowans in jeopardy,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP).

The new analysis by the Center on Budget and Policy Priorities shows that Iowa’s costs would continue to soar. By 2023, the state would have to find an additional $335.8 million to maintain coverage for people benefiting from the Medicaid expansion. That would be a 288 percent increase from the cost under current rules.

“The real question is whether Iowa’s political leaders on both sides of the aisle are willing to speak up about this to assure Iowa’s senators, Charles Grassley and Joni Ernst, are aware of the decisions being put on state lawmakers’ plates,” Owen said.

Peter Fisher, IPP research director, noted that about 150,000 Iowans benefit from the Medicaid expansion, which was part of the Affordable Care Act (ACA).

“Many thousands of Iowans have health coverage now because of the ACA and the Medicaid expansion,” Fisher said. “As we have stated before, any plan to replace ACA can be judged on how well those gains are maintained.

“The House bill would at best jeopardize the gains, and with higher costs for insurance, almost guarantee far greater numbers of Iowans would be uninsured.”

The CBPP report estimates the bill would jeopardize coverage for 11 million newly eligible low-income adults who enrolled in Medicaid under the expansion.

The report is available at http://www.cbpp.org/research/health/house-republican-health-bill-would-effectively-end-aca-medicaid-expansion.

In states that adopted the Medicaid expansion, the federal government pays at least 90 percent of the expansion costs — an enhanced rate compared to the regular Medicaid program. This change cut uninsurance rates in half for non-elderly adults in Medicaid expansion states, from 18.4 percent in 2013 to 9.2 percent in 2016.

Under the AHCA, however, the federal government would pay only the regular Medicaid matching rate, 58.5 percent in Iowa, for new enrollees beginning in 2020. Anyone whose Medicaid coverage lapses for more than two months becomes a new enrollee. Because Medicaid recipients cycle on and off the program, in the space of just a few years most enrollees would be “new,” and would lose Medicaid coverage altogether unless the state came up with the millions required to keep them on.

With the loss of the Medicaid expansion, the percent of Iowans who are uninsured could rise to levels even higher than existed prior to Obamacare. That is because those individuals who received some coverage from IowaCare, and who since moved to the Medicaid expansion, would not have IowaCare to fall back on when the expansion ends.

The Iowa Policy Project is a nonpartisan public policy analysis organization based in Iowa City. IPP and the Child & Family Policy Center in Des Moines together analyze fiscal policy issues as the Iowa Fiscal Partnership, www.iowafiscal.org.

#    #    #    #    #

State policies should focus on homegrown jobs

Posted March 15th, 2016 to Blog

2-3-16sfp-f1A recent report by Michael Mazerov and Michael Leachman finds that the vast majority of new jobs in a state are homegrown: They are created by start-ups and by firms already in the state who are expanding. Only 13 percent of new jobs come from new branch plants of out-of-state companies, or  actual plant relocations to a state. They argue that public policies need rethinking as a result:

“State economic development policies that ignore these fundamental realities about job creation are bound to fail. A good example is the deep income tax cuts many states have enacted or are proposing. Such tax cuts are largely irrelevant to owners of young, fast-growing firms because they generally have little taxable income. And, tax cuts take money away from schools, universities, and other public investments essential to producing the talented workforce that entrepreneurs require. Many policymakers also continue to focus their efforts heavily on tax breaks aimed at luring companies from other states — even though startups and young, fast-growing firms already in the state are much more important sources of job creation.”

Michael Mazerov and Michael Leachman. State Job Creation Strategies Often Off Base. Center on Budget and Policy Priorities, February 3, 2016. http://www.cbpp.org/research/state-budget-and-tax/state-job-creation-strategies-often-off-base#_ftn23

2010-PFw5464Posted by Peter Fisher, IPP Research Director

 

Editor’s Note: This also ran on IPP’s “Grading the States” website — gradingstates.org

Asleep at the Switch in Iowa

Posted July 9th, 2013 to Blog
Mike Owen

Mike Owen

Expedia, Orbitz and Priceline have caught us sleeping in Iowa.

Closing a loophole that lets those big online travel companies collect taxes on only part of sales taxes due on hotel room bookings is just one of four measures Iowa could take to lessen the drain of funds from state coffers before they are even collected.

A new paper by Michael Leachman and Michael Mazerov at the Center on Budget and Policy Priorities (CBPP) notes the four options for states. Iowa is one of only 12 states that has failed to take any of those steps. Besides correcting the problem with revenue lost from hotel bookings, CBPP recommends:

  • Broadening the tax base to include more services. While Iowa has a fairly broad base subject to sales tax, there are many exceptions to the state’s sales tax that have been successfully achieved by the business lobby. In general terms, CBPP notes that household spending has been shifting from goods to services for decades, yet most states haven’t updated their sales taxes to reflect this fact, costing states tens of billions of dollars each year.
  • Enacting an “Amazon law” to require large online retailers to collect sales taxes. Purchases made through large online retailers such as Amazon or Overstock are subject to sales tax, but retailers aren’t required to collect them in Iowa and 33 other states, at a cost of over $20 billion a year. This puts Main Street businesses in Iowa at a price disadvantage vs. those multistate operations selling the same book, boots, chain saw or prom dress that caught an Iowa consumer’s eye.
  • Extending the sales tax to Internet downloads. As with the Amazon loophole, the sale of computer software, music, movies, and various other goods delivered on the Internet are not taxed in 23 states including Iowa — even though those states tax the same items when sold in physical stores. Lost revenue: roughly $300 million a year.

The CBPP paper is a good look at an issue Iowa lawmakers have been reluctant to address.

This is one more way research has exposed that Iowa is permitting businesses to take advantage of its residents, by pushing the costs of public services onto other taxpayers, or damming the state’s revenue stream to block funds from flowing to the state. The Iowa Fiscal Partnership already has shown how big multistate corporations avoid corporate income taxes because Iowa refuses to close corporate tax loopholes the way several neighboring states do, and how big companies benefit from the kind of property-tax breaks passed this year. The new piece by CBPP shows sales taxes also are an area where big business makes big money at Iowa taxpayers’ expense.

All of these areas remain good targets for better, more accountable tax policy in Iowa.

Posted by Mike Owen, Executive Director


Better understanding the 47 percent

Posted October 1st, 2012 to Blog
Heather Gibney, Research Associate

Heather Gibney

The current political environment has set off a firestorm of confusion about who does and who does not pay taxes in America — and unfair criticism of many working families and others.

It’s true that 47 percent of Americans pay no federal income taxes, but they do pay taxes. In fact, almost two-thirds of the 47 percent are low-income, working households who are paying payroll taxes to help finance Social Security and Medicare, and many pay federal excise taxes on things like gasoline, alcohol and cigarettes.[1] These households are also paying a large percentage of their income in state and local sales and property taxes.

Many working Americans are exempt from the income tax because of features Congress added to the tax code — with overwhelming bipartisan support, in an effort to enable people to care for themselves and their children while encouraging them to work. Some of these features include the Earned Income Tax Credit, a Ronald Reagan era anti-poverty program that enables low-wage working families with children to meet their basic needs while promoting employment. In addition, the child tax credit gives families a tax credit through the form of a refund check even when they don’t owe federal income taxes.[2]

The other one-third of the 47 percent — those households that aren’t paying either major federal tax — includes those who are unemployed, low-income senior citizens who paid taxes during their working years and aren’t currently taxed on Social Security benefits, students, those who have disabilities or can’t work due to serious injury and people who don’t meet the income tax obligation because their wages aren’t high enough.

Often missed in the focus on those who are not currently paying income taxes is the errant assumption that all those people have never paid taxes and never will. Just because a household doesn’t owe income tax one year, doesn’t mean they won’t pay income taxes over their lifetime. For many, a career change, the loss of a job, a disability or injury, or low wages can lead to incomes too low to pay taxes.

Iowa households who aren’t paying federal income tax are still paying a large percentage of their incomes to state and local taxes. As the Iowa Policy Project reported in (2009), moderate-and low-income Iowans pay more of their income in state and local taxes than the rich do. [3] [4]

whopays2009As the graph at right shows, Iowa’s regressive tax system takes a larger share of the incomes from those who have the least, and a smaller share from those who have the ability to pay a larger percentage of their income. Make no mistake: Working Iowans pay taxes.

For more on this issue, see our two-pager, “Better understanding the 47 percent.”