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Tax credit could lift Iowa children out of poverty, advocates say
By CHARLOTTE EBY, chareby@aol.com
DES MOINES --- Iowa should boost its tax credit to low-income working families to lift thousands of children out of poverty, an Iowa City think tank says.
The Iowa Policy Project released a report Tuesday outlining the fiscal benefits to the state for expanding its earned income tax credit.
Peter Fisher, lead author of the report, said the tax credit rewards work and makes low-wage work more profitable. The earned income tax credit, extended to low-income workers, acts as a wage supplement and helps reduce child poverty rates, he said.
"Children raised out of poverty get more education and higher test scores, lower crime rates, less teen parenting, less welfare use, higher earnings," Fisher said.
Because the tax credit is refundable, those who qualify end up seeing a larger income tax refund than they would otherwise.
At the federal level, the maximum tax credit totaled roughly $4,800 for a single parent with two children last year, Fisher said. Iowa's earned income tax credit currently equals 7 percent of the federal credit, or $338 for that same parent.
If Iowa's credit were raised to 15 percent of the federal level, that would mean around $700 per year for that parent, Fisher said.
Boosting the state tax credit to 15 percent also would help lift 4,000 Iowa children out of poverty, according to Fisher.
Fisher said a 15 percent boost in Iowa's tax credit would bring in an estimated $1 million in new revenue to the state because workers would be earning more.
The Iowa Policy Project released a report Tuesday outlining the fiscal benefits to the state for expanding its earned income tax credit.
Peter Fisher, lead author of the report, said the tax credit rewards work and makes low-wage work more profitable. The earned income tax credit, extended to low-income workers, acts as a wage supplement and helps reduce child poverty rates, he said.
"Children raised out of poverty get more education and higher test scores, lower crime rates, less teen parenting, less welfare use, higher earnings," Fisher said.
Because the tax credit is refundable, those who qualify end up seeing a larger income tax refund than they would otherwise.
At the federal level, the maximum tax credit totaled roughly $4,800 for a single parent with two children last year, Fisher said. Iowa's earned income tax credit currently equals 7 percent of the federal credit, or $338 for that same parent.
If Iowa's credit were raised to 15 percent of the federal level, that would mean around $700 per year for that parent, Fisher said.
Boosting the state tax credit to 15 percent also would help lift 4,000 Iowa children out of poverty, according to Fisher.
Fisher said a 15 percent boost in Iowa's tax credit would bring in an estimated $1 million in new revenue to the state because workers would be earning more.
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