Iowa Fiscal Partnership / Iowa Fiscal Partnership
SHARE:
Policy Points from Iowa Fiscal Partners

Posts tagged Iowa Fiscal Partnership

Health care ‘reform’ just keeps getting worse

Posted April 27th, 2017 to Blog

The House Republican plan to replace Obamacare (the Affordable Care Act) with the American Health Care Act (AHCA), which a few weeks ago failed to even come to a vote, has been reincarnated. The new version of the AHCA has apparently won the support of the Freedom Caucus in the House, but in so doing has become significantly worse for millions of Americans.

Here are the key points about this new attempt to “repeal and replace” Obamacare:

  • Despite repeated promises to keep the most popular part of Obamacare, the provision prohibiting insurance companies from refusing to cover those with pre-existing conditions, the new version returns us to the bad old days. While a particular state may choose to keep the prohibition, there is no longer any nationwide requirement that insurance companies issue affordable policies regardless of pre-existing conditions.
  • Nationwide standards for health insurance policies will be rolled back; plans will no longer be required to cover services such as mental health, maternity care, or substance abuse treatment.
  • The nationwide prohibition on lifetime and annual limits on benefits will be gone, meaning the possibility of medical bankruptcy will loom once again for many.
  • The modified version of the bill still effectively ends the Medicaid expansion; about 150,000 Iowans now covered under that provision could lose insurance altogether.
  • The bill still cuts $840 billion from Medicaid over 10 years, most of the savings going to wealthy individuals, drug companies, insurance companies, and other corporations.
  • Premiums and deductibles will still rise for large numbers of persons buying insurance on the exchanges, especially for the elderly, those with lower incomes, and those in high-cost states or areas, such as most of rural Iowa.
  • Under the bill, there would be no limit on the premium an insurance company can charge based on medical history; thus someone with pre-existing conditions could in theory be offered coverage, but at a cost that is simply unaffordable. There is little difference between this situation and straight denial of coverage. A state could choose to prohibit this practice (i.e., to keep the Obamacare provision in place), but few states chose to do so before Obamacare.

While the proponents of this revised plan may argue that it keeps the prohibition on gender discrimination, a woman would pay substantially more for a plan that included maternity coverage. Such coverage would not be a required part of all plans, but instead would be an expensive option.

Just how this revised bill would affect overall coverage rates, premiums, and out-of-pocket costs, awaits a new analysis by the Congressional Budget Office. But it is quite possible that the bill will be voted on in the house without the benefit of that analysis. Part of the pressure to pass the bill now comes from the desire on the part of the Trump administration to come up with large savings to the federal government that can then be used to finance cuts to corporate and individual income taxes.

The bottom line: worse health care coverage at higher cost to millions, loss of coverage entirely to millions more, in order to finance tax cuts for corporations (and probably millionaires as well).

Posted by Peter Fisher, research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org

Also see Fisher’s March 2017 policy brief for the Iowa Fiscal Partnership: “Replacing ACA: What you need to know about the AHCA.”

Session Recap: ‘Historic’ — not label of pride

Posted April 25th, 2017 to Blog

By

4/22/17

IFP Statement: ‘Historic’ session not a label of pride

Legislative session hits working families and traditions of good governance

Basic RGB

Statement of Iowa Fiscal Partnership • Mike Owen, Iowa Policy Project

To describe the 2017 Iowa legislative session as “historic” is not a label its leaders should wear with pride.

Iowans needed a legislative session that worked to raise family incomes and expand educational opportunity. Iowans had long demanded water-quality improvement measures. Many called for lawmakers to address the lack of fairness, adequacy and accountability in a tax system laden with special-interest breaks and costly subsidies to corporations.

Instead, Iowans got a continued ratcheting down of funding for PK-12 public education. There were significant and serious cuts in post-secondary education that will lead to tuition increases. We saw cuts to early-childhood education and other programs that serve our most at-risk children and neglect of the child-care assistance program that helps working families struggling to get by.

The Legislature continues to demand little or nothing of industrial agriculture in cleaning up the mess it has left in our waters. Lawmakers tried to dismantle the Des Moines Water Works board, limited neighbors’ right to complain in court about pollution, and eliminated scientific research at the Leopold Center. Their ultimate action on water merely diverts resources from other priorities, such as education and public safety.

Lawmakers largely left the tax issue to the next session. An overture in the House to reform Iowa’s reckless system of tax credits was a welcome acknowledgment that this issue needs attention, but devils in the details make further discussion of this issue during the interim even more welcome.

Perhaps as troubling as the destructive nature of policy content this session, Iowa’s image of adherence to good governance took a big hit. The most controversial policy changes came not through collaborative, public discussion in committee, let alone the 2016 political campaigns, but were often dumped into lawmakers’ laps with little opportunity for amendments.

In what could accurately be called a “session of suppression,” lawmakers achieved:

  • Wage suppression, with a bill to preempt local minimum wage increases while refusing to raise Iowa’s repressive, 9-year-old minimum of $7.25.
  • Workplace suppression, gutting collective bargaining protections for public employees, and making it more difficult for Iowans recover financially from injuries on the job.
  • Health-care suppression, achieved in workers’ compensation legislation while also refusing to reverse Governor Branstad’s disastrous move to privatize Medicaid.
  • Local suppression, whacking at local government control in a variety of areas: minimum wage, legal defenses against concentrated animal feeding operations (CAFOs), fireworks sales, and collective bargaining options.
  • Voter suppression, with a bill to make it more difficult for many citizens, particularly low-income and senior voters, to exercise their right to vote.
  • Suppression of children’s healthy development, with additional cuts to Early Childhood Iowa and Shared Visions that will reduce access to critical home visitation, child care and preschool services for some of our most at-risk youngsters.

Some legislators may boast of a “historic” session. History will mark 2017 as a low point in Iowans’ respect and care for each other, a legacy that will not be celebrated when future Iowans look back on this session and the closing act of Governor Branstad’s long tenure in office.

#     #     #     #     #

The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonpartisan, nonprofit, Iowa-based organizations — the Iowa Policy Project in Iowa City, and the Child & Family Policy Center in Des Moines. Reports are available at www.iowafiscal.org, and on the websites of the two partner organizations, www.iowapolicyproject.org and www.cfpciowa.org.


Today’s virtual House graphic: Risky fix to non-problem

Posted March 27th, 2017 to Blog

Under the radar at the Iowa Statehouse, a significant and dangerous change is being promoted through a proposed constitutional amendment to cap spending in a state where spending is below the U.S. average.

The amendment — approved by the Senate and soon to be considered in the House — is a gimmick rather than real reform. In fact, because the amendment would require two-thirds approval of both legislative changes to prohibit spending more than an arbitrary limit, it would impede elected representatives from making the kinds of public investments in Iowa’s children, the state’s infrastructure, and our environment that the people of Iowa say they want. To learn more about this issue, click here for Peter Fisher’s brief report for the Iowa Fiscal Partnership.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session the Iowa Policy Project is offering examples. In today’s graphic, we illustrate the realities of state spending in Iowa, often inflated in political rhetoric.


Curtains for tax reform

Posted March 27th, 2017 to Blog

If there’s anything we need less of this legislative session, it is back-room dealing where major changes in public policy are hatched, then rammed through the Legislature without sufficient public vetting.

Senate Majority Leader Bill Dix is quoted in media that a tax plan is coming in the next two weeks. It’s staying under wraps until then — a terrible disservice to the responsible setting of public policy. Senator Dix should pull back the curtains, right now.

But, since the senator is not going to let the rest of us in on his big secret tax plan, we should all go into this recognizing at least two major points at the start:

(1) Iowa taxes are in the middle of the pack or below average by any responsible measure, something the business lobby and far-right ideologues never want to acknowledge; and

(2) any discussion of tax changes should take a comprehensive approach that should be grounded in widely accepted principles of taxation.

Point 2 is something that is always a problem in Iowa. The typical approach is to target one tax, cut it, and move on to the next one. Meanwhile, the impact on the overall adequacy and fairness of the tax structure (two of the important tax principles), and on the critical public service that the tax system supports, is left to a “let the chips fall” mentality.

Take the curtains away, Senator Dix. It’s the business of all Iowans, right now. A late-session rush job to make a major overhaul of Iowa taxes is not only wrong from a civics-textbook standpoint, but it is bound to create problems that its authors cannot predict.

Posted by Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

Repeal of Obamacare: Following the money

Posted March 21st, 2017 to Blog

Congressional Republicans have proposed replacing the Affordable Care Act, known as Obamacare, with the American Health Care Act, or AHCA. To understand why, suppose we follow the money — who loses, who gains?

On the losing side are thousands of Iowans who would find themselves facing higher costs for health insurance. Consider a married couple with two young children, and with $40,000 annual income. In Iowa’s metropolitan counties, this family’s tax credits for the purchase of health insurance would fall by $3,469 annually. In rural areas, where health insurance is much more expensive, the same family would face nearly an $8,000 reduction in credits — in other words, an $8,000 increase in the cost of health insurance. For couples in their late 50s or early 60s, the jump in costs is much higher: $11,300 in urban areas, over $17,000 in rural counties. (See an earlier IPP report for details.)

The much greater impact on rural Iowans is because the Republican plan gives everyone the same credit, whether they are in a high-cost or low-cost county. While the credit rises with age,  the credits for older Iowans cover a far smaller share of their much higher insurance costs. Overall, the average Iowa family currently receiving subsidies for the purchase of insurance would see a $2,512 drop in the subsidy.[1]

But who are the winners? The Republican plan includes tax cuts primarily for the wealthiest Americans, as well as drug and insurance companies. The 400 highest-income taxpayers nationally would get annual tax cuts averaging about $7 million each. These taxpayers, whose annual incomes average more than $300 million, would receive tax cuts totaling about $2.8 billion a year.[2]

We now know how two of these cuts, amounting to $31 billion a year, would impact Iowans. The Affordable Care Act was financed in part by these two new taxes. One is the Net Investment Income Tax, the other the Additional Medicare Tax. Both fall primarily on the wealthiest. Repeal of these two ACA taxes would shower $116.7 million in tax cuts each year on just 1.9 percent of Iowa taxpayers. A full 92 percent of those tax cuts would go to the richest 1 percent of Iowa taxpayers — those making $444,000 a year or more, and with an average income of $1.17 million. Those taxpayers would receive on average $7,004 a year.[3]

Basic RGB“Follow the money” is good advice. But what you find when you get there is often not a pretty picture.

[1] Aviva Aron-Dine and Tara Straw. House Tax Credits Would Make Health Insurance Far Less Affordable in High-Cost States. Center on Budget and Policy Priorities, March 9, 2017.

[2] Chye-Ching Huang. House Republicans’ ACA Repeal Plan Would Mean Big Tax Cuts for Wealthy, Insurers, Drug Companies. Center on Budget and Policy Priorities. March 8, 2017. http://www.cbpp.org/research/federal-tax/house-republicans-aca-repeal-plan-would-mean-big-tax-cuts-for-wealthy-insurers

[3] Institute on Taxation and Economic Policy. Affordable Care Act Repeal Includes a $31 Billion Tax Cut for a Handful of the Wealthiest Taxpayers. March 2017. http://itep.org/itep_reports/2017/03/affordable-care-act-repeal-includes-a-31-billion-tax-cut-for-a-handful-of-the-wealthiest-taxpayers-5.php

Posted by Peter Fisher, Research Director of the Iowa Policy Project

pfisher@iowapolicyproject.org


A spotlight, not a floodlight, on business breaks

Posted March 21st, 2017 to Blog

A bill in the Iowa House, HSB187, would cut a range of Iowa tax credits, eliminating refundability and capping overall spending on credits. There is significant opposition, because people like their tax breaks. But the issue is suddenly in the spotlight because these and other giveaways are responsible for Iowa’s serious revenue challenge.

There are solutions to the state’s rampant and often unaccountable spending on tax credits and other tax breaks. It is interesting that an interim committee that meets every year to examine a rotating set of tax credits has not produced any reforms. It’s not because reforms are not necessary. Rather, it’s a lack of resolve.

One of several strong recommendations in January 2010 by a Special Tax Credit Review Panel appointed by then-Gov. Culver in the wake of the film credit scandal was for a five-year sunset on all tax credits. This would require the Legislature to re-approve every tax credit.

That would be a start. Another option: Instead of eliminating refundability for all credits, which affects even credits where refundability makes sense (Earned Income Tax Credit), limit it where it does not. The Special Tax Credit Review Panel recommended eliminating refundability for big recipients of the Research Activities Credit (companies with gross receipts over $20 million). Another option would be to cap refundability for all credits at $250,000, which would not harm small players, either businesses or individuals, and would reduce the excessive checks to big businesses.

The scrutiny and demand for a return on investment on these credits would be too much for many of these special arrangements to withstand. Eliminating or capping wasteful credits would free up revenues for other priorities; some would invest more here or there — education, or public safety, or the environment — and some would simply use it to reduce overall spending. But either way, we would have the opportunity for a debate.

There is a danger in putting everything on the table at once. It presents a false equivalency of tax credits — that they are somehow all the same. It ignores the fact that some are for private gain and some for the common good, and some are a mixture. Some work, and some do not.

Some meet the purpose for which they were advertised (the Earned Income Tax Credit, for example, which benefits low-income working families), and some miss the mark with tens of millions of dollars every year (the Research Activities Credit, where most of the money goes to huge, profitable corporations that pay little or no income tax instead of to small start-ups as envisioned).

Iowa’s business tax credits will have risen by half from 2011 to 2021 under current official projections. That is where the spotlight needs to be.

Challenging all credits at the same time gets everyone’s backs up. That is a recipe to assure continued unwillingness to take on any of it. And that will not serve Iowa very well.

Posted by Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org


Tax credit reform, yes — but what kind?

Posted March 9th, 2017 to Blog

Reform of business tax credits in Iowa is long overdue, so the natural instinct is to welcome with open arms the interest of state legislators in a review of Iowa’s runaway spending on tax credits.

Yet, optimism must be tempered. There is a great opportunity; there also are pitfalls.

Fooled us once

Iowa’s last look at tax-credit reform came in the wake of scandal in its film industry tax credit program. Despite a strong report with potentially game-changing recommendations from a special task force of state agency heads in 2010, not much came from the Legislature. As we noted then, legislators acted with fierce caution that no doubt sent the business lobbyists off to celebrate.

That time, the review resulted from a scandal of law and ethics. What remained, and remains today, is a scandal of fiscal ignorance and arrogance. Iowa’s spending on business tax breaks has soared in recent years, and this budget choice has been a contributing factor to the stagnant or declining commitment to public responsibilities: education, the environment, health and public safety.

Fool us twice?

Such skepticism should be understandable not only with the anti-bargaining and anti-worker legislation Iowans have seen in this session, but with comments by legislators. In one shot across the bow, Rep. Pat Grassley stressed legislators would put everything on the table, including the Earned Income Tax Credit (EITC), which benefits low- and moderate-income Iowans.

Past study already has shown that, unlike Iowa’s most lucrative business tax credit, the Research Activities Credit:

•   the EITC has obvious benefits to the economy and Iowa working families.

•   the EITC benefits only people who need the help, where RAC is unlimited and in fact benefits some of the most profitable companies in the country.

•   the EITC benefits people when Iowa’s regressive tax system is otherwise stacked against them, where the RAC benefits those who already do well by Iowa’s tax code.

Already we know that the individual state and local tax system in Iowa — all effectively governed by state law — demands that people at the bottom of the income scale (actually the bottom 80 percent) on average pay 10 percent of their income in tax. At the same time, the wealthiest and most well-connected pay much less — 6 percent at the very top.

Already we know that Iowa’s total state and local taxes on business — again, all effectively governed by state law — are below the national average and by one national business consultant’s measure are among the lowest in the nation.

In a nutshell, heading into this discussion, beware the false equivalencies and more of the same business-lobby spin that has produced the unaccountable and unfair system that makes it difficult to fund critical public services.

And be sure we do not lose some important pieces now in place, including the transparency we have on the RAC with annual reports from the Department of Revenue.

We have called for reform and better oversight for years. If legislators are serious about it, this could be a good thing. If it is merely cover to further burden the poor, reduce transparency, or heap new breaks on corporations that do not pay their fair share, it could be one more step in Iowa’s low-road march to the bottom.

Posted by Mike Owen, Executive Director of the Iowa Policy Project

mikeowen@iowapolicyproject.org


Today’s virtual House graphic: Iowa impact of ACA repeal

Posted February 23rd, 2017 to Blog

170119-IFP-ACA-F1

Yes, whatever actions are taken on the Affordable Care Act will come from Congress, but state legislators may be left to pick up the pieces. Iowa legislators, are you paying attention? Are you talking to your federal counterparts about this? (Some are in the state this week.)

What many may not know is the impact the ACA has had on reducing the uninsured population in Iowa. The Medicaid expansion under the ACA is one of the big reasons we have seen a greater share of the Iowa population covered by either public or private insurance.

For more information on how the ACA has affected uninsurance in Iowa — and the stakes of repeal without an adequate replacement — see Peter Fisher’s policy brief, Repealing ACA: Pushing thousands of Iowans to the brink.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate the impact on Iowa, and potentially on state finances and responsibilities, if the federal Affordable Care Act is repealed.


Today’s virtual House graphic: The real business of business taxes in Iowa

Posted February 22nd, 2017 to Blog

170222-IPP-biztaxes-Anderson

One of many measures showing Iowa to be low or in the middle of the pack on business taxes is a study by the business consulting firm Anderson Economic Group. In its 2016 business tax rankings, Anderson ranked Iowa business taxes fourth-lowest.

In that analysis, Anderson looked at 11 taxes on business, and examined more than tax collections, but also how taxes paid by business compared to income available to pay the tax. Anderson said it used “taxes paid as share of profits, as this measure directly compares taxes paid to business income available to pay the tax.”

In fact, by the Anderson measure, Iowa ranks below all of its regional neighbors except South Dakota, which is lower only by one-tenth of a percentage point.

This finding is not unusual despite claims from the business lobby about Iowa taxes on business, as we have shown before. The latest examination by a widely known business accounting firm, Ernst & Young, puts Iowa state and local business taxes in the middle of the pack and below the national average, at 4.5 percent of private-sector GDP.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate where Iowa rates vs. other states, by responsible measures, on business taxes.


Kansans deliver tax-cut cautions for Iowans

Posted February 15th, 2017 to Blog

As part of Moral Mondays at the Iowa State Capitol, Iowa advocates and lawmakers this week heard a cautionary tale from Annie McKay of Kansas Action for Children and Duane Goossen of the Kansas Center for Economic Growth.

Annie McKay, president and CEO of Kansas Action for Children, speaks at the Moral Mondays Iowa event this week at the Iowa State Capitol.
Annie McKay, president and CEO of Kansas Action for Children, speaks at the Moral Mondays Iowa event this week at the Iowa State Capitol.

At a time when Iowa lawmakers are considering significant tax cuts, McKay and Goossen, who analyze and promote child policies and conduct analysis of the Kansas state budget, traveled to Des Moines to outline the effects of what has become known as the “Kansas experiment,” a set of draconian tax cuts passed in 2012.

At that time, Goossen recounted, Gov. Sam Brownback promised the cuts would bring an economic boom to the state, with rising employment and personal income. People would move to Kansas. It would be, the governor said, “like a shot of adrenaline into the heart of Kansas economy.”

But, five years on, the promised economic boom has not arrived.

“Business tax cuts were supposed to be magic, they were supposed to spur job growth — and they didn’t,” said Goossen, a former Republican state legislator and state budget director under three governors.

In fact, since 2012 job growth in Kansas has lagged behind its Midwestern neighbors, including Iowa. The state has, however, seen years of revenue shortfalls and damaging budget cuts, eroding critical public services like K-12 and higher education, human services, public safety and highway construction.

In this period, the state has depleted its budget reserves, robbed its highway fund to shore up its general fund, borrowed money and deferred payments in order to balance the budget. Kansas has experienced three credit downgrades. Lawmakers have raised the sales tax twice and repealed tax credits that helped low-income families make ends meet.  (In fact, the bottom 40 percent of Kansans actually pays more in taxes today than before the 2012 tax cuts went into effect.)

These actions have real impacts. Last year, Kansas saw the third biggest drop in child well-being among states as documented by Kids Count. Its 3rd grade reading proficiency ranking fell from 13th to 30th.

“What we did in Kansas – there is no proof behind it,” McKay said.

Iowans today are better positioned to stand up to damaging tax cuts than their Kansas counterparts were five years ago, McKay said. “We did not that have same people power in 2012.” She advised Iowa advocates to make crystal clear how all the issues currently generating widespread interest — education, health and water quality among them — are linked to the state’s ability to raise adequate revenue.

“You are ahead of where we were,” she said. “You have the opportunity to not be like Kansas.”

 

annedischer5464Posted by Anne Discher, interim executive director of the Child & Family Policy Center (CFPC).
adischer@cfpciowa.org

McKay and Goossen’s talk Feb. 13 at the Iowa State Capitol was coordinated by the Iowa Fiscal Partnership (a joint effort of CFPC and the Iowa Policy Project) and supported by the Center on Budget and Policy Priorities. CFPC, through its Every Child Counts initiative, is one of more than two dozen sponsors of Moral Mondays, a weekly gathering during session to highlight issues that advance Iowa values like equality, fairness and justice.