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Posts tagged Citizens for Tax Justice

$8.9 million revenue boost with immigration reform

Posted February 24th, 2016 to Blog

A new report projects a 24 percent increase in state and local tax revenues from undocumented immigrants in Iowa if they were granted permanent legal residence.

The 50-state study by the Institute on Taxation and Economic Policy examines current tax contributions by undocumented immigrants and projects how state revenues would rise either with the Obama Administration’s executive actions, or with passage of comprehensive reform that has stalled in Congress.

Find the report, Undocumented Immigrants’ State and Local Tax Contributions, here. It offers a sensible approach on how to quantify tax contributions by these immigrants — whose tax contributions often go unrecognized in political talking points. But undocumented immigrants pay sales and property taxes just like anyone else, and many have income taxes deducted from their paychecks.

As stated by ITEP’s state tax policy director, Meg Wiehe, “Regardless of the politically contentious nature of immigration reform, the data show undocumented immigrants greatly contribute to our nation’s economy, not just in labor but also with tax dollars.”

The report estimates current state and local taxes by undocumented immigrants in Iowa are $37.38 million, but would rise to $46.29 million — an increase of $8.91 million — with comprehensive immigration reform.

Full implementation of the 2012 and 2014 executive actions would create a smaller impact in Iowa, estimated to be a $3.61 million increase from the $17.18 million paid now by those affected.

According to ITEP, the 11 million undocumented immigrants currently living in the United States collectively paid $11.64 billion in state and local taxes. ITEP finds their combined nationwide state and local tax contributions would increase by $805 million under full implementation of the administration’s 2012 and 2014 executive actions and by $2.1 billion under comprehensive immigration reform.

 

Owen-2013-57
Posted by Mike Owen, Executive Director of the Iowa Policy Project
Contact: mikeowen@iowapolicyproject.org

Comforting the comfortable

Posted July 25th, 2014 to Blog

Comfort the comfortable and penalize the poor. Like the idea? If so, you’ll really like legislation scheduled for consideration today in the U.S. House of Representatives.

The House is scheduled to take up legislation that would gut improvements for low-income Americans in the Child Tax Credit (CTC), improvements passed originally in 2009, renewed in 2010 and 2012, the latter as part of the “fiscal cliff” package, where it was used as a bargaining chip to pass very expensive exemptions in the estate tax — a benefit only to America’s super-rich.

To put this in context, the House leadership bringing this new legislation to a vote will not even consider an increase in the minimum wage, now stagnant over five years nationally (6 1/2 in Iowa). The CTC, it must be noted, is one of the nation’s most effective anti-poverty tools, offsetting part of the cost of raising a child. So, as families earning at or below the minimum wage continue to lose ground, the CTC proposal will set them back even further. As noted by the Center on Budget and Policy Priorities (CBPP):

But a single mother with two children who works full time throughout the year at the minimum wage of $7.25 an hour (which House leaders oppose raising) and earns just $14,500 would lose $1,725. Her CTC would disappear altogether.

A loss at lower incomes — yet a boost at higher incomes. According to Citizens for Tax Justice, the Iowa impact of the new legislation would be:

  • a $285 loss on average to families with incomes below $40,000, and
  • a $696 benefit (tax cut) to families with income above $100,000.

Here’s how it works, according to a summary by CTJ:

The House Republican bill, H.R. 4935, would expand the CTC in three ways that do not help the working poor. First, it would index the $1,000 per-child credit amount for inflation, which would not help those who earn too little to receive the full credit. Second, it would increase the income level at which the CTC starts to phase out from $110,000 to $150,000 for married couples. Third, that $150,000 level for married couples and the existing $75,000 income level for single parents would both be indexed for inflation thereafter.

Adding insult to injury for low-income folks is that the improvements targeted for repeal came in the aforementioned “fiscal cliff” package, which made permanent big estate tax breaks for the rich, while extending improvements in the Child Tax Credit and Earned Income Tax Credit for only five years. CBPP’s Robert Greenstein at the time called that a “bitter pill.”

That was before these new proposals not only to cut back the CTC for lower-income families — but to expand access at higher incomes — and to adjust the high end for inflation, something lawmakers have refused to do for the minimum wage.

A bitter pill? At least. For some, all of this might seem to be an overdose.

Owen-2013-57Posted by Mike Owen, Executive Director, Iowa Policy Project


House vote: Thumbs up or thumbs down for 86,000 Iowa families?

Posted August 1st, 2012 to Blog
Mike Owen

Mike Owen

Iowans would stand to lose much under a proposal this week in the U.S. House of Representatives. Citizens for Tax Justice offered a striking analysis last week highlighting the impact of the 2009 improvements in the refundable tax credits for low-income working families in Iowa.

Simply put, the House proposal would undo the good work of 2009 and increase tax inequities, while a Senate-passed bill would keep the good stuff.

One of the 2009 improvements is an expansion of the Earned Income Tax Credit (EITC), an issue we have covered extensively at IPP and the Iowa Fiscal Partnership.

Any attempts to weaken the EITC at either the state or federal level will harm low- to moderate-income working families in our state. More than 1 out of every 7 federal tax filers in Iowa claims the EITC (about 15 percent). But under H.R. 8, the tax proposal being offered by the House leadership, the EITC improvements from 2009 would be lost.

H.R. 8 also would fail to extend the improvements made in the Child Tax Credit (CTC) in 2009, and in the American Opportunity Tax Credit for higher education expenses.

It is impossible to find balance in the approach of H.R. 8, which would end these provisions above for 13 million working families with 26 million children, while extending tax cuts for 2.7 million high-income earners.

The state numbers from CTJ (full report available here):

  • 86,321 Iowa families with 190,553 kids would lose $62.5 million ($724 per family), if 2009 rules on EITC and the Per-Child Tax Credit are not extended;
  • 17,503 Iowa families with 28,179 kids would lose $32 million if the Per-Child Tax Credit earnings threshold does not remain at $3,000, compared to $13,300 as proposed by H.R. 8.
  • 59,159 Iowa families with 139,806 kids would lose $30.5 million if the two 2009 expansions of the EITC — larger credit for families with three or more children, and reducing the so-called “marriage penalty” — are not extended in 2013.

These “Making Work Pay” provisions of the tax code are almost exclusively of help to working families earning $50,000 or less at a time of stagnant wages and a difficult job market in which the Iowa economy is shifting toward lower-wage jobs.

To address our nation’s serious deficit and debt issues, a balanced approach should do nothing to increase poverty or income inequality. The Senate bill passed last week would keep the EITC and CTC improvements from 2009, and follows that principle. The bill that has emerged in the House does not.

Posted by Mike Owen, Assistant Director