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A better choice for full-time investigator

Posted December 16th, 2013 to Blog

Today’s Des Moines Register reports that the big push by Iowa Secretary of State Matt Schultz to crack down on voter fraud is proving what he doesn’t want: that it’s not a problem in Iowa.

A full-time criminal investigator is on the job with five guilty pleas to show for it. Kind of makes you wonder why we bother, doesn’t it?

On the other hand, wage theft is a pervasive problem in America and, as we have shown, Iowa is no exception.

Yet Iowa has only one full-time position for enforcement of wage-and-hour rules even though the Iowa Policy Project has shown violations are pervasive and other states do more. Wage theft deprives Iowa workers of an estimated $600 million, when wages are not paid or underpaid, tips are skimmed by employers, and employees are misclassified as “independent contractors” to avoid taxes, unemployment insurance and workers’ compensation. It also deprives the state of tax revenue and deprives law-abiding businesses of an even playing field.

Budgets are a statement of values. We focus our finances — in the home and at the State Capitol — on what we think is important. Surely making sure hard-working people are paid what they are owed is on that list.

It defies good budgeting sense to devote a full-time criminal investigator to a phantom issue, particularly when those resources could be put toward sensible budget choices, such as enforcing worker protections. When unscrupulous employers know we’re not even watching them, we effectively encourage the very behavior we don’t want in Iowa.

Mike OwenPosted by Mike Owen, Executive Director


The $54 question

Posted November 25th, 2013 to Blog

Breaking news out of Des Moines is that many Iowa taxpayers will be eligible for an extra $54 tax credit.

This is the result of one of the most short-sighted pieces of legislation passed by the Iowa General Assembly in recent years. Lawmakers created what they called the “Taxpayers Trust Fund,” which we should call the “Giveaway Slush Fund.” It’s a pot of money to dole out to taxpayers and boast about at election time. Chances are, the “givers” won’t give you the whole picture.

Their game is an illusion, a political parlor trick: Hold down funding for key priorities, such as K-12 education, or universities, and then when revenues create a surplus, call it an “overpayment” by taxpayers.

Does anyone really believe their spin? The $120 million to be given away represents easily $120 million in services that could have been provided. For K-12 alone, a little over half of it could have been used this year to fully pay the state’s share of allowable growth at the 4 percent level lawmakers authorized. Instead, state funding only supports half of the state share.

By shortchanging school districts with funding for only 2 percent allowable growth this year despite strong revenues, lawmakers compounded a trend of squirreling away big dollars while claiming poverty. This way, they have given themselves $120 million to spend on dessert — the Giveaway Slush Fund — by choosing not to pay the state’s share of the bill for the meat and potatoes: school aid.

One Iowa columnist who has seen through this is The Des Moines Register’s Rekha Basu, who noted Sunday: “Doling out money piecemeal is a gimmick that may bring smiles to some faces but it can’t take the place of sound and consequential actions.” She’s right.

Is it really worth it to you to receive the $54, instead of putting adequate and appropriate funding back into our education system? Or cleaner water? Or safer streets? Or, well, you get the idea.

Give me a break. On second thought, don’t.

Mike OwenPosted by Mike Owen, Executive Director

The $54 question

Posted November 25th, 2013 to Blog

Breaking news out of Des Moines is that many Iowa taxpayers will be eligible for an extra $54 tax credit.

This is the result of one of the most short-sighted pieces of legislation passed by the Iowa General Assembly in recent years. Lawmakers created what they called the “Taxpayers Trust Fund,” which we should call the “Giveaway Slush Fund.” It’s a pot of money to dole out to taxpayers and boast about at election time. Chances are, the “givers” won’t give you the whole picture.

Their game is an illusion, a political parlor trick: Hold down funding for key priorities, such as K-12 education, or universities, and then when revenues create a surplus, call it an “overpayment” by taxpayers.

Does anyone really believe their spin? The $120 million to be given away represents easily $120 million in services that could have been provided. For K-12 alone, a little over half of it could have been used this year to fully pay the state’s share of allowable growth at the 4 percent level lawmakers authorized. Instead, state funding only supports half of the state share.

By shortchanging school districts with funding for only 2 percent allowable growth this year despite strong revenues, lawmakers compounded a trend of squirreling away big dollars while claiming poverty. This way, they have given themselves $120 million to spend on dessert — the Giveaway Slush Fund — by choosing not to pay the state’s share of the bill for the meat and potatoes: school aid.

One Iowa columnist who has seen through this is The Des Moines Register’s Rekha Basu, who noted Sunday: “Doling out money piecemeal is a gimmick that may bring smiles to some faces but it can’t take the place of sound and consequential actions.” She’s right.

Is it really worth it to you to receive the $54, instead of putting adequate and appropriate funding back into our education system? Or cleaner water? Or safer streets? Or, well, you get the idea.

Give me a break. On second thought, don’t.

Mike OwenPosted by Mike Owen, Executive Director

A new look for the first of the month

Posted November 1st, 2013 to Blog

All right! The first of the month! Always a big day for those living paycheck to paycheck. And November 1 is no exception.

Yet, for those working low-wage jobs and receiving SNAP benefits, November 1 is not as good as October 1. SNAP is the Supplemental Nutrition Assistance Program, which many know as Food Stamps. And it’s under constant attack.In Iowa, the more than 420,000 people who count on food assistance can count on less this month than they received a month ago.

Same goes for SNAP recipients across the country, as benefits drop with the expiration of small improvements that were passed in the 2009 Recovery Act.

SNAP benefits in Iowa have averaged about $116 a month per recipient — about $246 per household.* That works out to just about $1.30 per meal per person. Take a look below at what happens to that supplemental benefit when the modest improvement from the Recovery Act goes away today.

 SNAPmonthlyCut-1-31-13

Source: Center on Budget and Policy Priorities, http://www.cbpp.org/cms/index.cfm?fa=view&id=3899

Our economy has not fully recovered from the Great Recession. And if it’s not enough that this Recovery Act improvement is expiring before the work is done, recognize that some in Congress see right now as a time to whack away further at SNAP benefits as a new Farm Bill is negotiated.

Now, we might not like to hear that some 13 percent of the state’s population is receiving food assistance. But you don’t address that issue by just cutting benefits to those people who are stuck in low-wage jobs, or are children, or are seniors, or are disabled.You need to make the jobs better, which starts with an increase in the minimum wage and pressure on Iowa businesses that pay low wages to do better. If we want a higher-road economy, we need to put a better foundation under it.

Mike OwenPosted by Mike Owen, Executive Director

* Iowa Department of Human Services, Food Assistance Program State Summary for September 2013, Report Series F-1.


Why is the dream fading?

Posted October 7th, 2013 to Blog
David Osterberg

David Osterberg

“American dream is fading for middle class”

I took this headline from the October 7 Cedar Rapids Gazette. You can imagine what the article says — that many Americans’ faith in a brighter tomorrow has been eroded.

What is not mentioned in the article are simple numbers — 50 percent of all income in the country goes to the top 10 percent and nearly half that goes to the top 1 percent. There is just not much income left for the vast majority of us.

Statistics on income distribution come from two sources, the Census and the Internal Revenue Service (IRS). Data from both agencies say about the same thing. We are a very unequal country and it is getting worse.

The newest data I found comes from a University of California-Berkeley economist, Emmanuel Saez, and available on his website. IRS data shows that the top 10 percent, families with more than $114,000 per year in income took home 50.4 percent of all income in U.S. in 2012. This is the highest percentage ever recorded for this group in a data series going back to 1917.

The top 1 percent — families above $394,000 per year in income — took home 23.5 percent of all income. Their share was slightly higher in the late 1920s, but not much.

If you want more bad news for the middle class, Saez’ analysis shows that the top 1 percent of families captured just over two-thirds of the overall growth of real incomes per family over the period 1993-2012. The 99 percent shared the remaining third. So why is that American Dream fading?

Posted by David Osterberg, Founding Director


Blowhards can’t shut all of us down

Posted October 1st, 2013 to Blog

GEDSC DIGITAL CAMERA

For a couple of weeks, I’d planned to take today off. Doctor appointment, work in a few errands and odd jobs around the house, etc.

Now, wild Tea Partiers couldn’t keep me away.

No way I’m going to choose to take a day off when people I know are being forced to stay home, all for the sake of politics, and bad politics at that.

The shutdown of the federal government is an affront to self-government, to the concept of democracy in a republic.

Worse, it will have a real impact on real people. Not just the employees, some of whom are friends who live in my community — West Branch, the birthplace of President Herbert Hoover. Some are employees of the National Park Service, running and maintaining a national park; some work at the Hoover Presidential Library-Museum, part of the National Archives. But it also affects the rest of us. We all benefit from their work, some more directly than others.

Just yesterday on my way to work, I passed one of them working on railings of a bridge that children in our community cross on the way to school. She and some of her co-workers have kids in our schools, or have in the past. Wonder if she’ll be working tomorrow, I thought.

The national parks are, as a friend of mine pointed out this morning, some of the best places our country has to offer and we employ people to maintain them, preserve them and share the stories they hold. These federal employees — like those who preserve our physical and financial security — are routinely assailed by some who portray them as unnecessary and wasteful, among other things.

The portrayals say more about the portrayers than about their targets, the people we hire to do what needs doing.

And what they do needs doing, in practical terms certainly, but also because they remind us more of what unites us than of what divides us.

OK, now I’m off to my doctor’s appointment. But I’ll be back to work afterward, because blowhards in Washington can’t shut all of us down.

Posted by Mike Owen, Executive Director


Why, again, would it make sense to cut SNAP?

Posted September 17th, 2013 to Blog
Mike Owen

Mike Owen

This week, the U.S. House of Representatives will be considering severe cuts in the Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps. Already, SNAP benefits are scheduled to be cut in November because Recovery Act improvements will expire. Any discussion among Iowans about even more SNAP cuts should not miss this context:

Food security remains a serious challenge. In Iowa, the latest report from USDA suggests this has risen by almost one-third in the last decade, from 9.1 percent in 2000-02 to 12.6 percent in 2010-12. (three-year averages) The increase is even greater proportionally for families in more severe situations. See this information from the Iowa Fiscal Partnership.

SNAP use certainly has risen in the last several years — just as it was supposed to in tough times. We have not fully recovered from the Great Recession, but things are getting better and SNAP use will level off and decline as we recover. CBO predicts SNAP spending nationally to fall to 1995 levels by 2019. See this report from the Center on Budget and Policy Priorities.

SNAP is only a supplemental benefit, but a critical one even at only about $1.25 per meal per person in Iowa. We show the share of Iowans who benefit from SNAP, by county and by congressional district, in maps on our Facebook page  (compiled from Iowa Department of Human Services reports and U.S. Census data). By the numbers, here is the share of the population in each Iowa congressional district receiving food assistance in July:

1st District — 12.3 percent; about 94,000 people.
2nd District — 15.8 percent; about 121,000 people.
3rd District — 14.7 percent, about 115,000 people.
4th District — 12 percent, about 91,000 people.
Here’s the county-by-county look (note, the golder and greener a county, the greater percentage of the population receives food assistance):
CI-MapTemplate

The House bill would end categorical eligibility, which permits states to provide access to SNAP benefits for families just above the SNAP earnings limit of 130 percent of poverty. Iowa in 2008 used this option to expand gross income eligibility to 160 percent of poverty. An Iowa Fiscal Partnership policy brief last November noted this is particularly important for low-income working families with children, particularly when child care takes such a big bite out of their budgets.

SNAP is a work support. Contrary to the claims of detractors, SNAP is one of those benefits that enable people to take jobs they otherwise would not be able to accept. When we have an economy that is producing jobs that pay below what is needed to get by, these work support programs are critical. We have illustrated the issues there with our Cost of Living in Iowa research, where we have demonstrated that even at median wage, many Iowa families would not get by were it not for work support programs.
Posted by Mike Owen, Executive Director

Hyperbole Alert: The drumbeat to cut corporate taxes in Iowa

Posted July 24th, 2013 to Blog
Mike Owen

Mike Owen

TWELVE PERCENT!

The figure practically screams at you, even when it’s not in all caps, when the conversation comes to corporate tax rates in Iowa.

Here’s the thing: It’s not a real number. Not really.

That is what is known as Iowa’s “top marginal rate” on corporate income tax. And it’s not a real number because it simply does not — cannot — reflect what a business pays on all its profits. Yet that is the implication when people (especially politicians) or corporations complain about it.

A top Iowa columnist, Todd Dorman of the Cedar Rapids Gazette, this week discussed the political battles over Iowa’s latest gigantic subsidies to Egyptian fertilizer company Orascom. In his piece he expressed a note of concern about the hyperbole in those battles. Then, he turned the discussion to Governor Branstad’s desire for cuts in corporate income taxes.

It is in that discussion where the hyperbole typically has been the strongest in Iowa. We are often told — as Dorman noted — that Iowa’s top corporate income tax rate is the nation’s highest. Note the emphasis added on “top.” More on that in a moment. Dorman also noted, accurately, that Iowa “has four brackets and a tangle of special interest credits.”

Because of the latter, any serious concern for our corporate friends should evaporate. Because they’re really being taken care of quite nicely, thank you, by their friends in the General Assembly and the Governor’s Office.

Now, about that “top rate.” It applies only to Iowa-taxable corporate profits above $250,000. Iowa doesn’t tax any profits from sales outside the state, so the rate doesn’t apply at all there, which for many businesses is a significant share of profits. For all taxable profits below $250,000, rates are lower — 6 percent on the first $25,000, 8 percent on the next $75,000 and 10 percent on the next $150,000.

Before these rates kick in, the business gets to deduct half its federal income tax from taxable income, and may have other deductions or ways to shelter income from state tax.

Then, after the rates are computed and the taxes determined, the tax credits enter the picture — and state revenues exit. The state just expanded the potential for those credits by $50 million, raising the cap on a select group of credits. In the case of the Research Activities Credit, these credits not only erase all tax liability, but offer state checks for the remaining amount of the credit. Through that program in 2012, Iowa paid out almost $33 million to 130 firms that paid no income tax, because those companies had more credits than tax liability.

And you can bet the corporate execs and their accountants fully understand all these nooks and crannies in our tax code. But if you want to give them a free million or so, they’ll take it. They are smart folks, and they have proven themselves to be more skilled negotiators than Iowa’s economic development moguls.

Want to talk reform? Then recognize the real problems — that we receive less in corporate tax than we used to, and that a lot of corporate tax is not collected because of the swiss-cheese nature of our tax code. That gives us all something to talk about.

Just be ready for the hyperbole from those who don’t want to change that part of our system.

Posted by Mike Owen, Executive Director


For more information about Iowa business taxes, see these Iowa Fiscal Partnership reports:
— “Reducing Iowa Commercial Property Taxes,” by Heather Milway and Peter Fisher, April 24, 2013.
— “Amid Plans to Relax Limits, Business Tax Credits Grow,” by Heather Gibney, April 16, 2013.
— “Corporate Taxes and State Economic Growth,” by Peter Fisher, revised April 2013.
— “A $40 Million Budget Hole: Persistent and Growing,” IFP backgrounder, February 25, 2013.
— “Tax Credit Reform Glass Half-Full? Maybe Some Moisture,” IFP backgrounder, revised March 23, 2010.
— “Single Factor to Consider,” IFP backgrounder, April 2, 2008.


We promise: We won’t cook burgers

Posted July 18th, 2013 to Blog
Mike Owen

Mike Owen

So, McDonald’s and VISA have teamed up to tell low-wage workers how to make ends meet.

We have a proposal for McDonald’s and VISA: Leave economic and policy analysis to us, and we won’t compete with you on burgers and debt.

The McDonald’s/VISA plan is ironic on two fronts.

First, McDonald’s is an example of a low-wage employer — the folks who have profited mightily while their employees have not. In fact, the McDonald’s/VISA plan expects the worker to have two jobs, to make ends meet on an unrealistically low budget and have money left over — “spending money,” the plan happily calls it. That “spending money” would have to cover all food, among other things.

As Iowa Policy Project research has shown, the cost-of-living assumptions by McDonald’s are too low. A bare-bones budget for a single person in Iowa with no kids is just over $20,100 (2011 figures), requiring a job that pays about $24,000 before taxes. It assumes absolutely nothing for eating out (even at McDonald’s), let alone saving for school or retirement.

Second, McDonald’s/VISA doesn’t assume any cost of consumer credit for debt incurred, other than a car payment. VISA depends upon low- and middle-income folks taking on debt and seeing it pile up. Sometimes it’s consumer debt, but debt also can come from health-care out-of-pocket costs when your budget is on the edge. This is a very real cost for low- and middle-income families, and it can be made even worse with predatory lending practices that are dealt with feebly by state and federal lawmakers.

McDonald’s/VISA’s tortured compilation of expenses, it should be noted, comes fairly close to the one-person, total basic-needs budget we computed for 2011 — but a single person without kids would not come close to making that total budget by following the McDonald’s/VISA plan. Add child-related expenses, and — whoa! — there’s a fire in the kitchen!

McDonald’s and VISA also include some handy money-saving tips in their brochure to help low-wage workers get by, like riding your bike to work. How about these tips for saving money: Don’t eat out, and tear up your VISA card.

Click here to see how our researchers — Peter Fisher, Lily French and Noga O’Connor — came up with our numbers. Setting money aside for savings? Not possible. Health insurance at $20 a month? Actual insurance and out-of-pocket costs are far greater. The idea of having “spending money” left over? Laughable at best.

From “The Cost of Living in Iowa,” on IPP website

From “The Cost of Living in Iowa,” on IPP website

But none of this is funny. It illustrates that in the real world, choices for working people in Iowa are often about how to make ends meet when income falls short. And that is the situation for about three-fourths of single-parent families and about 23 percent of all families in our state.

Instead of assuring better ways to boost income, including a higher minimum wage, much of the public policy discussion is focused on cutting back supports such as food and energy assistance, not to mention Social Security, and holding down child-care assistance. We don’t seem to recognize the need for a living wage, however that may be computed. In the end, are we even willing to support a low-wage economy?

Posted by Mike Owen, Executive Director


Why SNAP matters: Wages aren’t always enough

Posted July 11th, 2013 to Blog
Mike Owen

Mike Owen

It’s really quite amazing what kind of arguments people will use to beat up poor people.

Such an example is in the comments section of a story in today’s Des Moines Register about the debate over the Supplemental Nutrition Assistance Program, or SNAP, commonly known as Food Stamps.

One writer, in playing to SNAP opponents, is pushing the idea that two full-time jobs at minimum wage lift a family above poverty according to the current administration. In that case, the writer implies, food assistance isn’t needed.

Let’s take a look at the actual numbers and what they mean. It’s not heavy lifting.

Actually the federal poverty guidelines as established have been consistent — and consistently faulty — through several administrations. They are seriously outdated and underestimate what is necessary to make ends meet.

The official poverty level for a family of four in 2013 is $23,550. Does anyone seriously believe a family of four can make it on that kind of income? Rent, food, clothing, utilities — the basics of just getting by — cost more than that in real life.

The Iowa Policy Project has looked at this issue and is constantly updating a more reliable estimate of what it costs to get by — our report, “The Cost of Living in Iowa,” is available on our website with county-by-county numbers that reflect this cost for varying family sizes.

You can quickly see how two minimum-wage jobs don’t get the job done.

A bare-bones family budget for a four-person family in the Des Moines area is — conservatively — $37,886 for one working parent. (Table below). That assumes $3,157 per month for clothing, household expenses, food, health care, rent and utilities, and transportation. If a second parent works you add more transportation costs, plus child care, which becomes the second-largest expense.

Next, figure in taxes — yes, they pay taxes, and a lot as a share of their income — and you get what it takes for a family just to get by. So, this absolutely no-frills budget, with no savings for school or a home or retirement, not even burgers at McDonald’s, rings up at $39,122 before taxes for one working parent, $58,520 for two.

120523-app-04-dm-w

And that means jobs that pay $14.63 an hour for each working parent, or $19.56 if one works.

Yet, at the $7.25 minimum wage, two jobs would pay $30,160. So much for the argument that two minimum-wage jobs per family solve poverty.

This helps to show why the meager Food Stamp benefit of about $1.25 per person per meal is such an important support for Iowa’s low-income working families. But while we’re at it, we could start talking about a higher minimum wage. Another day, perhaps.

Posted by Mike Owen, Executive Director