As published in the August 10, 2011, Press-Citizen, Iowa City
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The Press-Citizen's Aug. 5 editorial criticizing Gov. Branstad's veto of an improvement in the Earned Income Tax Credit points a laser at a critical issue for policy makers: Are we willing to adopt public policy that helps low- and moderate-income working families and the Iowa economy?
As the Press-Citizen states in "Gov. Branstad's vetoes are missing the mark," the Governor said he wants to take a more comprehensive approach to tax policy.
“That sounds to us like he didn't get the changes in corporate income tax and property tax laws that he wanted so he's not going to allow any change, even ones agreed to by Democrats and Republicans in the Legislature."
Well, not so fast. He did allow other changes.
In the very same bill, SF533, Branstad signed into law two other expansions of tax credits. One raises the cap on a tax credit that has been shown to have accountability problems, the School Tuition Organization Tax Credit.
Aside from its accountability issues, the credit deflects funds that could go toward public education, particularly in years like this one in which the governor and legislators froze per-pupil spending.
A second change in tax policy the governor approved in SF533 expands a tax break for border-city companies. Instead of providing a subsidy for creating jobs, the expansion permits the subsidy to retain jobs -- which may invite innovative ways to funnel public dollars into private hands. Instead of "Provide the break and we'll create new jobs in Iowa," it could be, "Provide the break or we'll move." Food for thought.
Like the EITC, those credits are scheduled for legislative reviews over the next two years. Unlike the EITC, neither of the other two credits already has received a high degree of scrutiny by economic researchers. Unlike the EITC, neither of those other credit expansions was subject to serious legislative debate in public.
The EITC has passed the test many times. As the Press-Citizen suggests, the EITC is shown to help the lower-earning families affected -- as well as local economies -- because of purchases they can and typically do make near home.
It can stand on its merits, and it has many times. The governor's veto cannot.
Lily French of Coralville is outreach coordinator for the Iowa Policy Project, a nonpartisan public policy analysis organization based in Iowa City. IPP reports are at www.IowaPolicyProject.org.
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