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As pace picks up, staying focused on ways to build middle class, get Iowa back to work

Published: Friday, March 15, 2013 11:30 a.m. CDT

We’re now just over half way through the legislative session and we’re beginning to spend more time on the House floor voting on bills and sending them over to the Senate.  At the same time, we’re seeing more details from budget subcommittees about next year’s state budget.  As the pace picks up on the floor and more budget decisions are made, I’m going to keep focused on ways to build the middle class and put Iowans back to work.

On the biggest issues of the session, some progress has been made but we need more dialogue and work across party lines to get the job done before adjournment in May.

One easy way to give the middle class a boost is expanding the Earned Income Tax Credit.  It gives hard-working Iowans, many of whom are working two or more jobs, a tax cut to help them put food on the table or pay their bills.  A bill is already moving in the Senate and it would make a difference for many families.

The bill raises the Earned Income Tax Credit from 7 percent up to 20 percent which includes families earning up to $45,000.  It puts over $50 million back in the hands of over 200,000 Iowa households, many of which have children. The idea has had strong bi-partisan support in the past and it’s something we can get done this year to build up the middle class.  

This week on the house floor, we considered a majority party proposal to institute a ‘flat-tax’.  I served on the subcommittee for this bill and voted in opposition.

HF 478 would create an alternative flat tax of 4.5 percent.  When filing your taxes, you would have to decide between the current system and the flat rate.  If you choose the flat rate, you cannot deduct federal income taxes, itemize deductions, or take any credits.  Charitable contributions would no longer be deductible.

During floor debate, I pointed out that this bill does nothing to help middle class families move forward and does nothing to help families struggling to move into the middle class.

What does this bill do?  It benefits high income earners. If this bill becomes law, the average tax break for an Iowan making under $30,000 who chooses the 4.5 percent flat-rate would be $75.  Now, $75 could buy some groceries or fill the gas tank, but it won’t help send a kid to college or even make a car payment.

In contrast, the average tax break for 1,236 Iowans who make over $1 million dollars is $42,000!

A total of $88 million would be shared among the top 1 percent of tax filers, while another $88 million would be divided up among the 80% who make up Iowa’s middle-class families and many of those trying to get into the middle class.

The flat-tax proposal approved by the house majority would afford high-income earners an opportunity to avoid taxes by bouncing back and forth from year-to-year between paying traditional income tax and the flat tax while, at the same time, shuffling income between tax years.

Many representatives, in my party, referred to this proposal as an opportunity for ‘gaming’ the system by high income earners.  I think ‘gaming’ is too generous a word. 

It should be called ‘cheating.’  We shouldn’t even consider legalizing it.

Approving this kind of proposal isn’t why I serve in the House.  We must focus on Iowa’s middle class families, who gather round the kitchen table and figure out how they can make it to the next paycheck.  Our focus must be to strengthen and insure middle-class-economic security.  

A strong middle class is the key to economic recovery.  Let’s take the focus off high income earners with tax consultants who can come up with a multi-year strategy to avoid taxes.   Most Iowa families need much more than a bag of groceries or tank of gas.  That’s all the majority party offers middle class families with this proposal.

Have a happy and safe St. Patrick’s Day! 

Feel free to contact me anytime at (641) 521-9260 or dan.kelley@legis.iowa.gov.  Visit my website at www.electkelley.com.  ‘Friend’ me on Facebook and ‘follow’ me on Twitter. 

Thank you for the opportunity to serve.

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