CCI Action Fund Members Weigh-in on Senator Hatch's Tax Plan

Senator Hatch´s Bold Proposal To End Federal Deductibility For The Rich Jumpstarts Badly Needed Public Debate On Urgent Need For Progressive Tax Reform

But CCI Action Fund members say progressivity must not come at the expense of revenue, and propose closing corporate tax loopholes and other measures to ensure revenue positive outcomeIowa Citizens for Community Improvement Action Fund (CCI Action Fund) members are praising, in broad strokes, Senator Jack Hatch´s recently released progressive tax reform proposals as a demonstration of bold leadership, but the grassroots people´s action group also cautions that that the net loss of revenue under Hatch´s plan is a real concern, one that can be addressed by dialing back the scope of some of his proposed tax cuts as well as by closing corporate tax loopholes that overwhelmingly benefit large, out-of-state corporations at the expense of everyday people and hardworking families.The crux of Hatch´s plan is his call for an end to federal deductibility, which overwhelmingly benefits Iowa´s wealthiest citizens, in order to partially pay for middle class tax cuts and other subsidies.  Still, the plan could deplete Iowa´s budget by hundreds of millions of dollars at a a time when additional revenue is sorely needed to fully fund state government after years of deep spending cuts following the 2008 economic crisis.Iowa CCI Action Fund members say the revenue dilemma in Hatch´s otherwise solid plan can be solved in four major ways:First, by closing corporate tax loopholes that allow out-of-state corporations like McDonalds and WalMart to avoid paying income taxes on sales generated in Iowa, which could raise up to $100 million a year in new revenue;Second, by eliminating the refundable Research and Development tax credit, which largely benefits out-of-state corporations to the tune of tens of millions of dollars every year, despite the fact these companies pay no state income tax already; andThird, by scaling back some of Hatch´s proposed tax breaks.  For example, Hatch proposes raising the per-child tax credit from $40 to $500, which could be scaled back to $250, or less, if needed.  Similarly, the senator proposed a new tax credit for married couples of $1,000 a year, which could be scaled back to $500, or less, if needed.Fourth, additional revenue can also be raised by ending tax subsidies for factory farm polluters, such as the pollution control tax exemption, which is a euphemistic misnomer, as well as other agribusiness tax breaks that add up to tens of millions of dollars a year and essentially incentivize corporate consolidation and water pollution."We applaud Senator Hatch´s bold leadership for kickstarting a badly needed public debate around the urgent need for progressive tax reform in the state of Iowa, particularly his proposal to end federal deductibility for Iowa´s wealthiest citizens," said Pat Bowen, a CCI Action Fund member from Iowa City."But as a basic principle we must not let progressivity trump revenue, which means some of Hatch´s more generous tax breaks may have to be dialed back, in addition to other progressive tax measures he left out like closing corporate tax loopholes on giant out-of-state corporations who aren´t paying their fair share in the state of Iowa."CCI Action Fund members point out that combined corporate reporting is the law of the land in the border states surrounding Iowa, which, if also enacted here, would make Iowa Main Street businesses more competitive and could also raise as much as $100 million in new revenue every year.  Iowa also wasted $32.5 million in refundable R&D tax credits in 2012, $44.9 million in 2011, and $43 million in 2010, nearly all of which also went to giant out-of-state corporations that pay no income taxes in Iowa.Iowa CCI Action Fund members support progressive tax reforms that add revenue to Iowa´s coffers and dispute the notion by many Iowa politicos that Iowa´s budget outlook is healthy just because there is currently a budget surplus.  The community power organization counters that the surplus only exists because of deep spending cuts enacted by both Governors Chet Culver and Terry Branstad in the wake of the 2008 economic recession cause by big bank greed on Wall Street, and say the prior spending cuts must be restored and built upon before Iowa´s financial outlook can receive high marks.Governor Branstad and his GOP allies in the Iowa House and Senate are expected to push corporate income tax cuts and other tax cuts for high-end income earners in the 2014 session, and Iowa CCI Action Fund members say they are ready to stand up and fight back with a "People First Iowa" vision that puts communities before corporations and people before profits, politics, and polluters.Iowa CCI Action Fund members will hold a “People First Iowa” community forum with Senator Jack Hatch at the Carroll Chamber of Commerce from 6:30-8pm on Saturday, December 14 in Carroll Iowa.