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Beware corporate tax con job

Posted November 29th, 2017 to Blog

EDITOR’S NOTE: A version of this piece appeared in the Wednesday, Nov. 29, 2017, Cedar Rapids Gazette. Online version here.

Those pushing the tax bill now before Congress have a tough job. They have to convince ordinary taxpayers that they should embrace a bill that gives massive tax cuts to corporations and rich people, raises the national debt, results in millions losing health care, and sets the stage for huge cuts in programs, from Medicare to food assistance to education.

Their principal argument — that trickle-down economics is going to bestow jobs and wages on the middle class — is a con job.

Why do U.S. corporations need a tax cut when they are already paying taxes at a lower overall effective rate than in other advanced economies? They don’t.

You have probably heard just the opposite: that our rates are the highest in the world, a skewed view that ignores only the nominal tax rate is higher than most other countries. In fact, a myriad of deductions and loopholes brings the actual rate corporations pay way down, to below average.[1]

The huge deficits created by this tax bill — $1.5 trillion over 10 years — would push interest rates up and would choke off investment, counteracting any tendency of the corporate tax cuts to increase investment. Furthermore, an examination of developed economies across the globe shows that corporate tax cuts over the past 15 years have not produced growth in capital investment. [2]

Nor is a cut in corporate tax rates going to lead to wage increases. U.S. corporate tax rates were slashed in the late 1980s, and in the years since we have seen the historic link between productivity and wages broken. In other words, the last corporate tax cut ushered in a period of stagnant wages, even though productivity continued to rise.

Think of it this way: Why would we expect tax cuts now would lead to corporations sharing productivity growth with workers through higher wages? It hasn’t been happening for the past 30 years.

It gets worse. The bill is supposed to be only $1.5 trillion because there are other tax increases that hold down the total. However one of those offsets won’t work as planned. A minimum tax on overseas profits, which sounds like a good idea, will actually provide an incentive for multinational companies to move American jobs overseas in order to escape the new tax.

Those who want us to believe in the magic of trickle-down economics are trying the oldest tactic in the books: misdirection. Focus on this shiny bauble — a small cut in your taxes in the short run — and this pie-in-the sky promise of jobs and higher wages; pay no attention to the billions of dollars going to corporations and the rich, and the inevitable cuts in programs, from health care to education to Medicare.

Peter Fisher is research director of the nonpartisan Iowa Policy Project in Iowa City. pfisher@iowapolicyproject.org

 

[1] U.S. corporation income taxes amount to 2.2 percent of GDP, while other advanced economies (the remaining countries in the Organization for Economic Cooperation and Development) collect 2.9 percent of GDP in corporate taxes. See “Common Tax ‘Reform’ Questions, Answered.” Josh Bivens and Hunter Blair, Economic Policy Institute, October 3, 2017.

[2] Josh Bivens, “International Evidence Shows that Low Corporate Tax Rates are not Strongly Associated with Stronger Investment.” Working Economics Blog, Economic Policy Institute, October 26, 2017.

Senate bill: Short of rhetoric

Posted November 28th, 2017 to Blog

GUEST BLOG
Despite Child Tax Credit change, Senate Tax Bill Doesn’t Live Up to Rhetoric in Supporting Families with Children

One of the few provisions in the proposed Senate tax bill that has bipartisan support is increasing the Child Tax Credit (CTC), which has been designed to better reflect the costs of raising children. It has been cited as a major benefit to working and middle-class families with children.

Like other provisions, however, this change is done in ways that provide almost no help to working low- and moderate-income families, while providing huge breaks for very wealthy ones. For middle-income families, the gains from a higher child tax credit are mostly offset by losses in personal exemptions, and some middle-class families would actually pay more under the proposals than under current law.

The Senate and House versions both provide information needed to calculate the taxes different tax filers would pay on their 2018 income (the year the changes go into effect) and to then compare these with the taxes they would pay under current law.

In the Senate version, the partially refundable portion of the CTC is unchanged, except that it would be indexed for inflation going forward, increasing to $1,100 in 2018. The nonrefundable credit is increased by $1,000 per child, making a maximum credit per child of $2,000 (the House version provides only an additional $600 credit, in addition to also indexing the partially refundable portion to $1,100). Both bills extend eligibility for higher income families (from a current phaseout beginning for married joint filers at $110,000 of adjusted gross income to $500,000 in the Senate version and an even higher level in the House version).

Performing the comparison of what tax filers in 2018 would experience from the CTC increase, a single mother with two children working full time and making a little above the minimum wage, $16,000 per year, gets no benefit under the House version and only $75 under the Senate version, compared with current tax law. A married couple with two children making $29,600 only receives the additional $100 per child of the refundable credit under the Senate and House versions. That the CTC provisions largely leave behind low and moderate-income families is particularly unfortunate, as these are the families that live paycheck to paycheck and could most benefit from additional support in raising their children.

Meanwhile, a married couple with two children making $300,000 per year gets the full benefit of the tax credits, $4,000 for the two children under the Senate version. This is on top of a tax cut from other changes in the tax code of at least $8,639 (which would be more if the family has extensive itemized deductions or tax-exempt income). Overall, this family is at least $12,639 better off after doing its taxes, compared with current law, $4,000 due to its new eligibility for the CTC.

For simplicity, these examples assume that all income is earned income and that the filers all take the standard deduction. If, because of buying a home, paying state and local taxes or a combination of the two, middle-income taxpayers now itemize their deductions, the increase in the standard deduction may not help at all and the loss of personal exemptions may mean they pay more taxes.

A married couple starting out with a young child and $60,000 of income, for instance, who now claims $24,000 as an itemized deduction ($18,000 in mortgage interest and property taxes, $4,000 in state and local taxes, and $2,000 in charitable contributions or other deductions) would owe $359 more in federal taxes under the Senate version. Although the family would benefit from the increase in the CTC, that would be more than offset by other changes, such as the loss of personal exemptions.

The chart below shows the specific impacts on these families of the changes in the child tax credit itself but also the changes of the overall tax changes to their individual income tax:

Tax proposals should be examined both in terms of individual provisions and in terms of their overall impact. On the former, under the Senate version the benefits of raising the Child Tax Credit are highly skewed toward the highest income tax-filers. This needs to change, by making the CTC refundable and not extending it so dramatically to the highest income families.

On the latter, the overall structure of the tax provisions largely negate the positive impact expansions of the CTC have for many middle-income families, while bestowing even more benefits on high income ones. Tinkering with the CTC without major changes in other provisions in the tax proposal cannot correct these flaws.

Rather than adding CTC provisions to a bill with other fundamental flaws, Congress should start with how it can make the CTC better reflect the cost of raising families. There exist different bipartisan proposals that would do this, but the proposal before Congress goes in the opposite direction.

Charles Bruner of Ames, a former member of the Iowa House and Senate, is director emeritus of the Child and Family Policy Center in Des Moines. CFPC, he worked with the Iowa Policy Project to form the Iowa Fiscal Partnership. Find his commentary on current issues at childequity.org. Contact him here.


Red ink, inequity and pain

Posted November 14th, 2017 to Blog

UPDATED NOV. 20*

redink-capitol

To dive into an ocean of red ink for a tax cut that will do little to boost the economy is one thing. To pretend it benefits middle-class families is, at the least, cynical.

It is impossible to view either the Senate or House tax bills moving in Washington as anything but a boost to the wealthy.

Responsible analysis by respected research organizations makes this apparent. The wealthy don’t just do the best in this legislation — they are the clear focus of it.

New data released by the Institute on Taxation and Economic Policy offer several key illustrations of how the Senate Republican proposal approved last week by the Finance Committee, which includes Iowa Senator Chuck Grassley, will affect Iowans:

  • The middle 20 percent of families, people making between $59,300 and $87,080 (average $72,400) receive only 12 percent of the overall tax cut in 2019. Meanwhile, the top 20 percent receive more than half — 62 percent.
  • In 2019, the top 1 percent has a larger overall tax cut than the bottom 60 percent, $483.1 million (average $32,200) to $407.9 million (average $450).
  • In 2027, as the small benefits at the middle phase out and structural changes at the top are made permanent, the bottom three-fifths of Iowa taxpayers will see $58.7 million in tax increases averaging $60, while the top 1 percent will keep an average $4,770 tax cut at a cost to the treasury of $67.7 million.

Those who are promoting this bill should at least have the honesty to call it what it is: a new handout to the wealthy — one that everyone will pay for, to the tune of $1.5 trillion over 10 years, and an almost certain loss of critical services that benefit all.

* Note: The original post from Nov. 14 has been updated with figures from the Institute on Taxation and Economic Policy analysis of the bill passed by the Senate Finance Committee.

2017-owen5464Mike Owen is executive director of the nonpartisan Iowa Policy Project.

mikeowen@iowapolicyproject.org

 


More debt, inequity and pain

​FOR IMMEDIATE RELEASE, Tuesday, Nov. 14, 2017

Senate tax plan: More debt, more inequity, more pain
Like House bill, Senate plan stacks the deck against services and opportunity

IOWA CITY, Iowa (Nov. 14, 2017) — Senate Republicans’ new tax proposal in Washington carries many of the same problems of equity and fiscal irresponsibility of the House plan.

“This plan is not only unbalanced. The scales are being tipped all the way over,” said Mike Owen, executive director of the nonpartisan Iowa Policy Project (IPP). “Adding $1.5 trillion in debt at the almost certain cost of food and health assistance for the vulnerable and educational opportunities across the board — really, did anyone promote doing that in the last campaign? Did anyone vote for it?”

In addition, the nonpartisan Institute on Taxation and Economic Policy has released new estimates showing that for Iowa, well over half of the tax reductions would go to the top 20 percent in both 2019 and 2027 under the Senate plan. Some taxpayers would pay more, but very few of those at the top — 2 percent — while in both years, 13 percent of the middle one-fifth of taxpayers would pay more. [Find the full ITEP report here]

“Overall, these are especially troubling implications for Iowa, with daunting fiscal challenges coming in only two months with the new legislative session. Besides penalizing low-income families at a steep cost to all taxpayers, this plan would shift new costs to the state, which is becoming a common theme in Washington,” said Mike Crawford, senior policy associate for the Child & Family Policy Center (CFPC) in Des Moines.

“This Congress, many will recall, also attempted to shift hard choices and big costs to the states with health-care proposals that, thus far, have been unsuccessful. The tax choices being offered in the House and Senate threaten state resources and services as well.”

Specifically, the Senate bill would eliminate the federal income tax deduction for state and local taxes paid. The largest beneficiaries of this deduction are high-income taxpayers.

“This change could pressure states to make new reductions in taxes for those taxpayers — who already pay a smaller share of their income in state and local taxes than do low- and moderate-income taxpayers,” Owen said. “Furthermore, this would cut into revenues, which already are running short of expectations and pose difficult choices for state legislators in January.”

The bill would provide nearly half of total tax benefits to the top 1 percent of households, which would receive tax cuts averaging over $50,000 by 2027. In addition, the legislation would:

  • Skew a critical tax credit now targeted for low-income working families, the Child Tax Credit (CTC), to couples with incomes between $110,000 and $1 million. While extending this benefit to those higher-income families, it would deny any significant help ($75 or less) to 10 million children in low-income working families. The Center on Budget and Policy Priorities estimates that in Iowa, the House bill would totally leave out 89,000 children in those working families, and either fully or partially exclude 203,000 from the bill’s increase in that benefit.
  • Further reduce the federal estate tax, which already carries significant exemptions from tax for the very wealthy — $5.5 million per person and $11 million per couple. Because of these already generous exemptions, the estate tax already only affects two-tenths of 1 percent of estates nationally and in the state of Iowa. It is the only way a small amount of tax is collected on certain income. (The House bill would fully phase out the estate tax.)
  • Cut taxes for millionaire households by lowering the top income tax rate compared with the House bill, and by providing a deduction for “pass through” businesses that mean big tax cuts for high-income households.

“Elements of the Senate bill make only slight improvements to the House bill, and like the House bill it is heavily skewed to the wealthy,” Owen noted.

“Take the example of the Child Tax Credit. This program is intended to be a work support, to assist people in low-paying jobs. In our low-wage state especially, it makes no sense to be extending this credit to wealthy families when low-income families are being left out of an improvement.”

Unlike the House bill, the Senate bill would not cut the wind production tax credit, which has been critical in making Iowa a leader in clean energy.

IPP and CFPC are nonpartisan, nonprofit Iowa-based organizations that collaborate as the Iowa Fiscal Partnership on analysis of public policy choices affecting Iowans, particularly those in working families and at low incomes. Find reports at iowafiscal.org.

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Against tax spin: Wealthiest benefit

​IFP News

Against the spin: Wealthy benefit most from House plan
In Iowa and nationwide, federal tax proposal skewed to benefit millionaires

 

IOWA CITY, Iowa (Nov. 6, 2017) — New national and state-level analysis shows the wealthiest taxpayers are the biggest beneficiaries of the House tax reform proposal, exposing exaggerations of middle-income benefits in a package that could threaten critical services to low- and moderate-income families.

The Institute on Taxation and Economic Policy (ITEP — itep.org) released its analysis today. Its national findings follow estimates by Congress’ nonpartisan Joint Committee on Taxation late last week that also show benefits of the plan are heavily skewed to the wealthy.

Among ITEP’s findings for Iowa:

  • In 2018, the middle 20 percent of Iowa taxpayers will see an average tax cut of $790, compared to a $36,100 tax cut for the top 1 percent, a benefit 46 times higher for the very rich, whose annual income averages $1.2 million.
  • The inequity grows by 2027, as the average middle-income cut falls to $340 (less than half of the 2018 figure) while the very rich get a $48,520 tax cut — a third greater than in 2018, and a benefit 143 times greater than the middle-income average. (graph below)
  • The top 20 percent take 61 percent of the tax benefit in 2018, and 69 percent of the tax benefit in 2027.
Tax Cuts Skewed to the Wealthy in House Plan, 2018 and 2017
171106-ITEP-taxreform
Source: Institute on Taxation and Economic Policy
 
“So much for boosting the middle class. The rich in Iowa do far better than middle and lower-income taxpayers in our state under the House tax plan,” said Peter Fisher, research director of the nonpartisan Iowa Policy Project (IPP), part of the Iowa Fiscal Partnership with the Child & Family Policy Center (CFPC) in Des Moines.

CFPC interim director Anne Discher agreed.

“While focusing rightly on who actually benefits from this legislation — and who does not — we should not miss the impact on services and the difficult choices that will be forced upon states by federal tax cuts,” Discher said. The tax package will cost an estimated $1.5 trillion over 10 years.

Discher agreed with ITEP that low- and middle- class families likely will pay for these tax cuts for the wealthiest through reduced investments in education, health care, infrastructure, scientific research, environmental protection, and other priorities.

The ITEP analysis examines the difference in tax benefits at various incomes both in 2018 and 2027.

Fisher noted the ITEP analysis shows the legislation does not mean tax cuts for everyone, and in some cases means tax increases. Five percent of all Iowa taxpayers would see a tax hike in 2018, rising to 13 percent in 2027, according to ITEP.

“This plan benefits the wealthy immediately, but disguises even greater benefits and disparities that will become apparent well after the next election,” said Mike Owen, executive director of IPP.

“What might appear to some to be a substantial benefit at the middle next year — an average tax cut of $790 — will vanish by more than half in 2027, as even greater benefits to the very wealthy are phased in over the decade. The benefit at the top 1 percent, on average, is projected to grow from a $36,100 tax cut in 2018 to $48,520 in 2027.”
The ITEP analysis shows, in fact, that the value of the average tax benefit drops over the nine years for every income group in Iowa except the very top 1 percent. But this bias to the very rich would take place long after the 2018 and 2020 elections when policy makers might have to defend them.

“A closer look at the details of this tax plan indicates that lawmakers are most serious about ensuring that they lower tax bills for the highest-earning households,” said Alan Essig, executive director of the Institute on Taxation and Economic Policy.

ITEP and others have noted specific disparities in the treatment of various taxpayers under the proposed bill.

For example, after five years, the bill would eliminate a $300 non-child dependent credit that benefits low- and moderate-income families while reducing and eventually eliminating the estate tax, which benefits only the wealthiest two-tenths of 1 percent of estates in Iowa and the nation.

“The estate tax assures at least some taxation of extremely large amounts of income that otherwise are never taxed,” Owen said. “The estate tax already is effectively very low for even enormous estates — the first $5.5 million of an individual’s estate, or $11 million of a couple’s estate, is exempt from tax. And no family inheriting an estate of less than those amounts faces any estate tax at all, so the scare tactics that are used with small businesses and farm families are very misleading.”

The Iowa Fiscal Partnership is a joint public policy analysis initiative of the Iowa Policy Project in Iowa City and the Child & Family Policy Center in Des Moines. Reports are available at www.iowafiscal.org.

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About those 10 reasons, Senator …

Posted September 22nd, 2017 to Blog

Senator Chuck Grassley of Iowa has made the point himself: The Cassidy-Graham bill to repeal the Affordable Care Act (ACA) has many deficiencies.

“I could maybe give you 10 reasons why this bill should not be considered,” he told Iowa reporters.

So, let’s look at some of the reasons, on the merits, why people might have concerns about Cassidy-Graham.

  1. People with pre-existing conditions would lose access to health care. Protection of these people assured now under the ACA would be left to state decisions, with states already cash-strapped.
  2. Many who became eligible for coverage through the Medicaid expansion of the ACA would lose it. In Iowa, about 150,000 people gained coverage by this expansion.
  3. It would change Medicaid expansion to a block-grant program that provides states no flexibility to deal with recessions or prescription drug price increases.
  4. Medicaid for seniors, people with disabilities, and families with children would be capped on a per-person basis. Anything higher would be left to the states to provide. There is neither any assurance states would want to do that, or even be financially able to do so.
  5. Iowa would be marched to a $1.8 billion cliff in 2027 under this bill, with federal support dropping sharply. For context, that is the equivalent of about one-fourth of the current state budget.
  6. Millions would lose insurance coverage. While we’re still waiting for the estimate from the Congressional Budget Office, past repeal proposals show this. And, since this bill offers nothing beyond 2027 for the Medicaid expansion, via block grant or otherwise, the prospect of 32 million people losing coverage (as demonstrated in estimates in previous ACA repeal legislation) is very real.

In Iowa? The graph below shows how Iowa’s uninsured population has dropped with the advent of the ACA, or Obamacare. Census data show uninsurance in Iowa dropped by nearly half in just three years, by about 116,000 — from 8.1 percent uninsured in 2013 to 4.3 percent in 2016.

So, this is a good start on why Iowans might be concerned about Cassidy-Graham — a last-ditch effort to rush into law radical changes in the way millions nationally and over 100,000 in Iowa gained access to health care in just three years.

We invite Senator Grassley to add to the list and get us to the full 10 reasons he suggested that might cause concerns about this bill.

Or better yet, maybe together in a deliberative process that involves everyone, we can come up with a list of 10 things that any health care policy should address.

Surely the list would include insuring more people, assuring more with practical access to health care when they need it, improving public health and reducing costs. We invite Senator Grassley to that discussion.

Mike Owen, Executive Director of the  Iowa Policy Project
mikeowen@iowapolicyproject.org


Protect Iowa taxpayers from bad spin

Posted August 30th, 2017 to Blog

“Protecting Iowa’s taxpayers,” reads the headline on the newspaper column, but the column contradicts that.

On the pages of major state newspapers this week, Iowans for Tax Relief (ITR) is offering its predictable and tired promotion of tax and spending limitations that are neither necessary nor fair.

Instead of protecting taxpayers who live in Iowa and do business here, these gimmicky limitations promote an ideological agenda that fails to offer prosperity — ask Kansas — and is a poor solution to imagined problems invented by its authors.

The limits advocated by ITR never are necessary or fair, but this is especially so where we see K-12 school spending held below needs, where higher-education spending is cut and tuitions raised, and where worldwide corporate giants are taking bites out of Iowa millions of dollars at a time — over $200 million in the case of Apple last week.

By all means, let’s protect taxpayers from thumb-on-the-scale rules that give a minority viewpoint a decided and sometimes insurmountable advantage over the majority. The big money put behind these ideas make elections less meaningful, and erode Iowans’ ability to govern themselves.

The real path to prosperity for Iowa is a high-road path that rests upon sensible investments in education and public infrastructure that accommodates commerce and sets a level playing field for business and individuals. It means promoting better pay to keep and attract workers who want to raise their families here, and sustaining critical services.

Time and time again, we and others have shown irrefutably that Iowa is a low-tax and low-wage state. We already are “competitive” to the small degree that taxes play a role in business location decisions; even conservative analysts such as Anderson Economic Group and Ernst & Young put Iowa in the middle of the pack on business taxes.

Suffice it to say, you are being peddled a load of garbage by the far right and the privileged, who take what they can from our public structures and policies, and attempt to deny others not only public services, but also a say in the funding of programs that promote opportunity and prosperity for all.

The same suppression mindset prevailed in the Iowa Legislature in 2017 as a majority bullied public workers and decimated workers’ rights. Now they are taking on tax policy in 2018, plus the possibility of new assaults on retirement security and renewed neglect of our natural assets of air and water.

Shake your head at the headlines, throw a shoe through the TV if you must, but only by engaging these issues at every step of the political process will we turn Iowa back from our low-road course.

This is the battle of the 21st century. We are living it. May we survive it.

Mike Owen, executive director of the nonpartisan Iowa Policy Project

mikeowen@iowapolicyproject.org


Health exchanges: Why not fix?

Posted July 12th, 2017 to Blog

What would be your response if someone said to you: “The transmission in my car needs an overhaul. This just proves vehicular transportation doesn’t work, so I am going to get rid of my car and my pickup, even though the truck is still running fine.” You would probably think they were crazy. Why not just fix the car’s transmission?

Yet this is the logic being put forward by Senator Grassley and many others as they seek to repeal Obamacare. Yes, we have a problem with the insurance exchange in Iowa, where we now have just one insurance company offering policies. But instead of pursuing solutions to that problem, our representatives are using it as an excuse to repeal Obamacare, including the Medicaid expansion, which has nothing at all to do with the insurance exchange and in fact is still in good running order.

The lack of insurers in the Iowa exchange is largely a self-inflicted problem. Insurers have left the market in part because the state of Iowa did so little to encourage people to sign up, and to provide assistance in navigating the exchanges. Iowa was also extremely generous in allowing people to continue with existing poor-quality insurance.

The problem was worsened by President Trump’s efforts to sabotage the exchanges during the final weeks of the annual sign-up in January by banning all advertising and encouraging people to think Obamacare was going to end. As a result, the number enrolling in the exchanges, which had been on a pace to exceed that of the previous year, ending up falling short.[1] Too few younger and healthier people enrolled, leaving the insurance companies with older and sicker people.

There are solutions to this problem. Both the Iowa Insurance Commissioner and Iowa Democrats have proposed measures to solve the exchange problem at the state level. But the House and the Senate bills repealing and replacing Obamacare, instead of shoring up the exchanges, repeal the individual mandate. Analyses of their replacement provisions predict that they would worsen the problem instead of solving it, leaving the exchanges with even fewer healthy individuals.[2]

Now about the pickup truck. The Senate’s Better Care Reconciliation Act (BCRA) would likely result in 232,000 Iowans losing health insurance coverage over the next five years.[3] Three-fourths of them would become uninsured because of the loss of Medicaid, the rest because of cuts in premium assistance for policies purchased on the exchange.

Iowa expanded Medicaid eligibility (with 90 percent federal funding under Obamacare) to include low-income non-elderly adults, most of whom are working in low-wage jobs with little or nothing in benefits. The BCRA would effectively end the Medicaid expansion for about 177,000 Iowans.[4] This will hit rural Iowa the hardest, and it will undermine the finances of rural hospitals.

The Medicaid expansion has nothing to do with the health insurance exchanges. Our representatives should stop using a fixable problem with the exchanges as an excuse for passing a broad bill that ends health insurance for tens of thousands of Iowans.

[1] Center on Budget and Policy Priorities, Sabotage Watch: Tracking Efforts to Undermine the ACA. http://www.cbpp.org/sabotage-watch-tracking-efforts-to-undermine-the-aca

[2] Jacob Leibenluft and Aviva Aron-Dine. Senate Health Bill Can’t Be Fixed; Reported Changes Would Not Affect Bill’s Core Features. Center on Budget and Policy Priorities, July 10, 2017. http://www.cbpp.org/research/health/senate-health-bill-cant-be-fixed

[3] Linda Blumberg et al. State-by-State Coverage and Government Spending Implications of the Better Care Reconciliation Act. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2017/rwjf438332

[4] Robert Wood Johnson Foundation and the Urban Institute. The Impact of Per Capita Caps on Federal and State Medicaid Spending. March 2017.

Peter Fisher, Research Director, Iowa Policy Project & Iowa Fiscal Partnership

pfisher@iowapolicyproject.org


A look at future health care in Senate plan

Posted July 6th, 2017 to Blog
What Iowans need to know about coverage and costs

Health care policy is a complex issue. There’s no getting around that. But one way to consider the options vs. what we have is to look at basic, reliable estimates of the real-life impacts of the policy choices. How many Iowans would have insurance, and how many would not?

The Urban Institute has state-by-state estimates of these impacts. By 2022 — five years from now — under the Senate’s proposed Better Care Reconciliation Act, uninsurance in Iowa would more than double. Across the board of various population groups, significantly more Iowans (including children) would be uninsured than under the current Affordable Care Act, (ACA, or ObamaCare).

According to the Urban Institute:

• 148,000 non-elderly adults would be uninsured, or 8 percent, under the ACA, compared with 351,000 under BCRA, or 19 percent. This is an increase of 137 percent.

• 25,000 children would be uninsured, or 3.2 percent, under the ACA, compared with 54,000 under BCRA, or 6.9 percent. This is an increase of 117 percent.

• 115,000 non-elderly, non-Hispanic white Iowans would be uninsured under the ACA, or 5.4 percent, compared with 306,000 under BCRA, or 14.3 percent. This is an increase of 167 percent.

• 38,000 non-elderly Hispanic Iowans would be uninsured under the ACA, or 16.6 percent, compared with 53,000 under BCRA, or 23 percent. This is an increase of almost 39 percent.

For more about the impacts of the Senate proposal, see this Iowa Fiscal Partnership backgrounder by Peter Fisher of the Iowa Policy Project.


KanOwaSin: Low-road neighbors, together?

Posted June 27th, 2017 to Blog

Here we sit in Iowa, nestled between two political petri dishes where experiments have gone wrong, and wondering if our elected leaders may let the mad scientists loose on us as well.

Some politicians would like to turn Iowa into another Kansas, another Wisconsin, where tax-cut zealotry already has driven down economic opportunity.

Welcome to KanOwaSin. In the anti-tax ideologues’ world, we’d all look the same. Why not ​share a name?


​Before someone squeezes another drop of anti-tax, anti-worker snake oil on us, let’s get out the microscope.Our friends in Wisconsin tell us: Don’t become Wisconsin. Our friends in Kansas tell us: Don’t become Kansas — and Kansans already are turning off the low road.A couple of researchers in Oklahoma are telling us: Listen to those folks. From the abstract of their working report:

“The recent fiscal austerity experiments undertaken in the states of Kansas and Wisconsin have generated considerable policy interest. … The overall conclusion from the paper is that the fiscal experiments did not spur growth, and if anything, harmed state economic performance.”

 

Their findings are among the latest exposing the folly of tax-cut magic, particularly with regard to Kansas, which IPP’s Peter Fisher has highlighted in his GradingStates.org analysis that ferrets out the faulty notions in ideological and politically oriented policies that tear down our public services and economic opportunity.

Iowa has long been ripe for tax reform, due to a long list of exemptions, credits and special-interest carve-outs in the income tax, sales tax and property tax. These stand in the way of having sufficient resources for our schools, public safety and environmental protection.

Each new break is used to sell Iowans on the idea that we can attract families and businesses by cutting  — something we’ve tried for years without success, as Iowa’s tortoise-like population growth has lagged the nation.

On balance, this arrangement favors the wealthy over the poor. The bottom 80 percent pay about 10 percent of their income in state and local taxes that are governed by state law. The top 1 percent pay only about 6 percent. Almost every tax proposal in the last two decades has compounded the inequities.

For the coming 2018 legislative session, and for the election campaigns later that year, we are being promised a focus on income tax. Keep in mind, anything that flattens the income tax — the only tax we have that expects a greater share of income from the rich than the poor — steepens the overall inequity of our regressive system.

Thus, as always, the devil is in the details of the notion of “reform.” If “reform” in 2017 and beyond means more breaks for the wealthy, and inadequate revenue for traditional, clearly recognized public responsibilities such as education and public health and safety, then it is not worthy of the name.

So, when you hear about the very real failures of the Kansas and Wisconsin experiments, stop and think about what you see on your own streets, and your own schools. Think about the snake oil pitches to follow their lead, and whether you want Iowa on a fast track to the bottom.

That is the promise of Kansas and Wisconsin for Iowa.

Or, if you prefer, KanOwaSin.

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Dan S. Rickman and Hongbo Wang, Oklahoma State University, “Tales of Two U.S. States: Regional Fiscal Austerity and Economic Performance.” March 19, 2017. https://mpra.ub.uni-muenchen.de/79615/1/MPRA_paper_79615.pdf
Posted by Mike Owen, Executive Director of the Iowa Policy Project
mikeowen@iowapolicyproject.org