Senate panel approves low-income tax break

Published: Wednesday, March 13, 2013 11:32 a.m. CDT

DES MOINES (AP) — Low-income residents in Iowa would get a bigger break on their taxes under a bill moving through the state Senate, a Democratic lawmaker said Tuesday.

Sen. Joe Bolkcom, D-Iowa City, said the proposal would raise the state credit from 7 percent to 20 percent of a taxpayer’s federal earned income tax credit. He said the measure would apply to households with incomes of less than $45,000, and about 210,000 households would get a roughly $250 tax break.

“The earned income tax credit is widely believed to be the single biggest effort to reduce poverty in the country,” Bolkcom said. “We have an increasing number of families living in poverty and this credit goes to them.”

Providing the credit would cost the state about $55 million, Bolkcom said. The bill received approval from the Senate Ways and Means Committee on Monday and now goes to the full Senate for a vote.

Republicans on the committee voted against the legislation. Sen. Randy Feenstra, R-Hull, unsuccessfully sought to amend the bill to offer a credit to more taxpayers. His amendment would have provided a credit to about 1.2 million families. His plan, which would have cost over $300 million, failed to earn support.

“We want it to be more comprehensive and return the tax credit to more people,” Feenstra said during the committee hearing Monday.

Bolkcom called Feenstra’s amendment “reckless,” given the cost to the state budget.

While Democrats who control the Senate support the effort, it may have little chance of becoming law. Gov. Terry Branstad has vetoed similar legislation in past years.

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