Iowa’s legislators get $800 million to play with for Christmas. Naturally, many of them think they can spend it better than those of us who gave it to them, based on a Des Moines Register report today quoting a bunch of prominent state politicians.
For example, Joe Bolkcom, Iowa City Democrat and Chair of the Senate Ways and Means Committee:
“We have a silent crisis in the number of kids and the number of our children living in poverty in our state,” Bolkcom said. “One of my top priorities will be addressing that crisis as a matter of tax policy. We need to use some of this tax surplus to make a substantial boost in the earned income tax credit.”
Bolkcom also favors appropriating $20 million as a state match to help secure an $87 million Federal Railroad Administration grant to establish passenger train service between the Quad Cities and Iowa City, a move he says would create hundreds of jobs.
That’s two awful ideas. As we have pointed out, increasing Iowa’s earned income credit would impose a brutal combined effective income tax rate of over 50% on low income workers — rewarding dependency and punishing taxpayers for emerging from poverty.
And for the passenger rail plan — that’s ten kinds of crazy. With the Megabus making three daily runs between Chicago and Iowa City for no more than $39.50 — and for as little as $1.50 — it’s hard to imagine a less urgent priority than pouring $20 million into a $310 million federal-state boondoggle to establish rail service that will lose millions annually selling $42 tickets for slower service.
Unfortunately, none of the politicians quoted by the Register proposes using the surplus to overhaul Iowa’s dysfunctional and business-hostile income tax. There is a better way: Lower the rates, simplify the system, repeal the job-killing corporation income tax, and eliminate the corporate welfare deductions and tax credits. In other words, The Quick and Dirty Iowa Tax Reform Plan.
Fiscal Cliff Notes
Can I return it? AMT, the Gift You Don’t Have to Wrap! (Trish McIntire)
Paul Neiffer, One Week to Go Checklist
Missouri Tax Guy, Can an LLC be Taxed as an S Corp
Scott Hodge, Taxing Guns to Pay for Cops in Classrooms? A bad idea to fund another bad idea.
That’s the way to bet, anyway. Sometimes the Cynics Are Right (Russ Fox)
Loss carryforwards? Why Santa Won’t Owe Any Income Taxes This Year (TaxGrrrl)
Robert D. Flach won’t let the post-holiday letdown kill his Buzz!
Because I want to finish reading the phone book first? Why Not Read the Entire Sales Tax Statute? (Jim Maule)
Tags: EITC, Fiscal Cliff, iowa tax policy, Jason Dinesen, Joe Bolkcom, Kay Bell, maule, Megabus, Missouri Tax Guy, passenger rail, Paul Neiffer, Quick and Dirty Iowa Tax Reform Plan, Quick and Dirty Tax Reform Plan, Robert D Flach, Russ Fox, Scott Hodge, TaxGrrrl, Trish McIntire