A Country Club Giveaway
Amidst musings on Vilsack’s trip to the world’s newest democracy, Yepsen comments that the legislature’s compromise budget is likely to emasculate proposed increases in teacher pay and leave Republican tax cuts for seniors in, albeit at half the original proposal:
Instead of Vilsack’s five-year plan to raise teacher pay, look for only the first two years of it to be funded. Instead of a $200 million Republican tax cut for seniors, look for only $100 million.
If that’s true, the Iowa legislature will be making a big mistake. The Republic-proposed senior tax cuts are a thinly veiled handout to Iowa’s richest retirees that will increase the tax burden on working Iowans. Sold as relief for Iowa’s poorest seniors (the proposal includes an end to “all state income taxes on individuals age 65 or older who earn less than $36,000 and couples making less than $48,000.”) what Republicans fail to mention on their website is the windfall for Iowa’s wealthiest retirees. Indeed, Iowa law already exempts the social security income of 2/3 of seniors and a substantial amount of pension income isn’t taxed either. Rather than a win for Iowa’s poorest seniors, the senior tax cuts passed by the house will most help Iowa’s wealthiest retirees afford kitchen renovations.
The bottom line is, seniors are not unfairly hit by taxes in Iowa, and shifting the burden will only mean working Iowans will be squeezed tighter than they already are.
So why do Republicans claim the tax cut is necessary?
By eliminating the tax on pensions and Social Security benefits, we can help keep seniors from leaving Iowa and taking their incomes and civic contributions with them.
The problem? Retiree flight is a fantasy. From 1995 to 2000 only 7/10 of one percent of seniors left Iowa. Of those, most moved to states with higher tax burdens.
Indeed, the Register has it today that it isn’t retirees who are leaving Iowa, but workers—the same people who are expected to pick up the slack after the Republican country club giveaway. As for those seldom few who return to Iowa, they seem to come back to raise a family and give their kids an Iowa education—two words that won’t mean much if Iowa can’t attract qualified teachers.
If Republicans are serious about stopping emigration, they should think about bolstering state education and job opportunities, not tax cuts for wealthy retirees.
1 comment April 20th, 2006
