Summary of 2009 Legislative Session

I plan on writing some about the 2009 Legislative Session, but haven't had time.

Here's a great summary of the session that I found at Covering Iowa Politics.

BUDGET/BONDING: Lawmakers approved a fiscal 2010 general fund budget of $5.78 billion but added $500 million of federal stimulus help for total spending of $6.258 billion beginning July 1. That compared with a revised $6.11 billion for the current year and Gov. Chet Culver’s fiscal 2010 recommendation of $6.46 billion. Majority Democrats also approved Culver’s multi-year infrastructure bonding plan of $715 million and $115 million mostly for University of Iowa flood recovery. The bonds are funded from several sources, most notably about $50 million in annual gambling profits for 20 years. The proceeds are expected to finance hundreds of infrastructure projects and create at least 22,000 jobs.

DISASTER RECOVERY: Lawmakers tackled disaster recovery from many angles, offering tax abatement for property owners who improve damaged properties, authorizing the sale of bonds to finance infrastructure improvements and policy changes to requires cities to participate in programs to lower homeowners’ cost for flood insurance. Included in the relief was $45 million in bonds targeted to Cedar Rapids, the $56 million Jumpstart program to help homeowners and businesses and funding for the Rebuild Iowa Office to coordinate recovery efforts.

TAX POLICY: Despite bipartisan effort to raise the state gas tax, the effort was abandoned after Gov. Culver, who had expressed reservations, finally said he would veto it. Near the end of the session, majority Democrats rolled out a plan to lower taxes for nearly 60 percent of income taxpayers while holding another 14 percent harmless. The plan encountered vigorous opposition because it ended federal deductibility, a provision that allows Iowans to deduct what they pay in federal taxes from their state tax liability. Lawmakers did decide to cap business tax credits at $185 million a year and require more accountability for refund incentives. They also raised court fees by $16.7 million.

CONSUMER PROTECTION: Lawmakers expanded health care coverage for children with a goal of having virtually all kids covered by the end of 2010. They also expanded the ability of consumers to seek damages by bringing a private cause of action against fraudulent businesses. Iowa currently is the only state without that provision. They also beefed up efforts to prevent dependent adult abuse and strengthen the state’s response when allegations of potential mistreatment arise – action triggered by the Atalissa bunkhouse situation.

LABOR: Lawmakers gave state labor officials and county attorney more tools to prosecute employers who fail to pay employees or violate child labor law. Maximum civil penalties of $10,000 can be levied per child labor violation and child labor criminal penalties were increase from simple misdemeanors to serious misdemeanors. Also, civil penalties were increased from $100 to $500 per pay period for failing to pay an employee’s wages. The time span for collecting jobless benefits was doubled for Iowans laid off due to the economic downturn.

PUBLIC SAFETY: Lawmakers overhauled the state’s sex offender laws, scaling back a law that bans some offenders from living within 2,000 feet of a school or daycare. The bill establishes exclusionary zones around schools and other public areas where sex offenders are prohibited from visiting. Lawmakers also voted to create a statewide electronic database to track sales of pseudoephedrine, an ingredient found in cold medicine that is used to make illegal methamphetamine.

EDUCATION: Majority Democrats protected the commitment to raise teacher pay to the national average by using a share of $386 million in federal stimulus money to fully fund a 4 percent allowable growth for K-12 schools and provide nearly $280 million for salary compensation. Money prospects were less rosy for other educational sectors that face spending cuts due to budget constraints. A couple of perennial issues lawmakers have argued over will be around for a fresh debate next year. The lawmakers again could not agree to increase the compulsory school attendance age from 16 to 17. Neither did they agree to change the start date for schools to prohibit schools from beginning classes before the fourth Monday in August.

AGRICULTURE: Efforts to ban so-called “puppy mills” appeared to have failed until funding for an additional state department of agriculture inspector was included in the catch-all $2.7 billion standings bill. Opponents said the bill would unfairly restrict reputable dog-breeding operations. Lawmakers also moved to restrict the application of liquid manure on snow-covered fields and frozen ground to keep it out of waterways. They also made changes to the grain indemnity fund to address volatility in the ethanol production market.

ENVIRONMENT: Gov. Chet Culver’s bonding plan passed by lawmakers includes $25 million for watershed, water quality and soil conservation projects, as well as flood rebuilding and prevention. Another $55 million would go to sewer infrastructure needs, in an effort to improve Iowa’s water quality. Lawmakers also approved incentives for small wind energy projects and for producers of wind energy components that locate and expand in Iowa.

ECONOMIC DEVELOPMENT: Lawmakers cut spending for the state’s top economic development program, the Iowa Values Fund, by $5 million next fiscal year to $45 million. The bonding plan would spend $12 million for the Community Attraction and Tourism program and other $10 million for river enhancement projects.

UNFINISHED BUSINESS: Procedural hurdles and top Democratic leaders kept lawmakers from considering a constitutional amendment defining marriage as only between one man and one woman. The issue is guaranteed to resurface in the 2010 election-year session given that an Iowa Supreme Court ruling legalizing gay marriage becomes effective next week. Several labor-backed changes that stalled this year are likely to resurface next year as well. Bicyclists likely will push a Senate-passed safety measure that stalled in the House. Likewise for a biodiesel mandate, expanded mental health insurance coverage and vehicle emission standards. Efforts to raise the state gas tax may rekindle next session but more likely in 2011.

Taxes, Tea Parties, and Tax Fairness

David Sirota appeared on CNN to discuss taxes and mops the floor with conservative Ben Ferguson. Sirota points out that a recent Gallup poll shows 60% of Americans believe upper income people pay too little taxes Ferguson is dumbfounded.

The Truth about Taxes

Robert Reich, Secretary of Labor under Bill Clinton, dispels some rightwing myths about taxes.

1. "Americans pay too much in taxes." Wrong: The United States has the lowest taxes of all developed nations.

2. "The rich pay too much! The top ten percent of income earners pay over 72 percent of all income taxes!" Misleading: The main reason the rich pay such a large percent is they've become so much richer than the bottom 90 percent in recent years. If you look at what they pay as individuals -- the percent of their incomes over and above the highest rate below them -- you'll see a steady decline over the years. When Republican Dwight Eisenhower was president, the marginal rate on the highest earners was 91 percent (after deductions and tax credits, closer to 50 percent); by 1980 it was still up there, at 70 percent (an effective rate of closer to 45 percent); under Bill Clinton, it was 38 percent (an effective rate closer to 28 percent).

Look at the after-tax earnings of families and you'll see what's really going on. Between 1980 and 2000, the after-tax earnings of famlies at the top rose more than 150 percent, while the after-tax earnings of families in the middle rose about 10 percent. The Bush tax cuts of 2001 and 2003 raised the after-tax incomes of most Americans by a bit over 1 percent -- but raised the after-tax incomes of millionaires by 4.4 percent.

3. "The bottom 60 percent pay only 3.3 percent of the taxes!" Misleading again. Most Americans are paying more in sales taxes than they ever have. Property taxes have also been rising at a steady clip. And Social Security taxes have also risen (thanks to the Greenspan Commission), while earnings over about $100,000 aren't subject to Social Security taxes. So-called "sin" taxes (mostly beer and cigarettes) have also skyrocketed. All of these taxes take a bigger bite out of the paychecks of people with lower incomes than they do people with higher incomes.

4. "Obama is raising your taxes!" Wrong. Obama is cutting taxes for 95 percent of Americans, by about $400 per person a year -- not a whopping tax cut, to be sure, but not a tax increase by any stretch. Only the top 2 percent will have a tax increase, but even this tax increase is modest. Basically, they go back to the rates they were paying under Bill Clinton (their deductions will be limited to 28 percent, which is only fair). And they won't start paying this until 2011 anyway.

5. "The huge debts we're wracking up will cause your taxes to rise!" Wrong again. When it comes to the national debt, as I've said before, the relevant statistic is the ratio of debt to the gross domestic product. The only sure way to bring that debt down and make it manageable in future years is to get the economy growing again -- which requires that, in the short term, the government spend a lot of money (because consumers and businesses won't). In the long term, the biggest source of concern is rising health-care costs. And that's something Obama and Congress are aiming to tackle.

6. "We have a patriotic duty to stand up against Washington taxes!" Just the opposite. We have a patriotic duty to pay taxes. As multi-billionaire Warrent Buffett put it, "If you stick me down in the middle of Bangladesh or Peru or someplace, you'll find out how much this talent is going to product in the wrong kind of soil. I will be struggling thirty years later." President Teddy Roosevelt made the case in 1906 when he argued in favor of continuing the inheritance tax. "The man of great wealth owes a particular obligation to the state because he derives special advantages from the mere existence of government."

If You're Planning Tea Bagging Across The Country...

David Schuster talking about the teabagging today by Republicans all across the country.



Money quote...

If You're Planning Tea Bagging Across The Country, "you're going to need a Dick Armey."

Aint no party like a Tea Party

Republicans across the nation are protest a tax increase on the rich by holding tea parties.

I am pretty sure these wealthy protesters probably look like this...

A Tea Party to Protest Tax Increases on the Rich?

Today, Republicans have found an issues that solidifies their conservative values. Across the nation tea parties are being held to protest a tax increase on the rich.

Led by Fox News, these Republicans are upset over Barack Obama's statements that he is going to raise taxes on the people that make over $250,000 a year to the same levels they were under in 1990's. (If I remember correctly, the economy did pretty darn well under Bill Clinton in the 90's.)

There are plans for a tea party in Des Moines today at the State Capital Building.

From Open Left...

They will provide a staged, corporate lobbyist-sponsored moment for Republicans and Fox News personalities to amplify their specious objections to President Obama's tax increase for the rich, while furthering their own right-wing conspiratorial claims about liberal values.

This story at MyDD tells about a gallup poll that shows Americans are pretty split on the tax issue and a majority believe the rich (those making over $250,000 a year) should be paying a little more...

A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is "about right," with 46% saying "too high" -- one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low. [...]

The slightly more positive view this year may reflect a public response to President Barack Obama's economic stimulus and budget plans. He has promised not to raise taxes on Americans making less than $250,000, while cutting taxes for lower- and middle-income Americans. The latter has already begun, as the government has reduced the withholding amount for federal income taxes from middle- and lower-income American workers' paychecks.

Which pretty much begs the question: what exactly are the teabaggers protesting, exactly, the largest middle class tax cut in history? The irony (and tragedy) is that a lot of these tea bag parties are going to entail middle class folks throwing tea into some body of water presumably (?) in protest of a slight increase in taxes on only the wealthiest Americans, who are precisely the ones, through their perches at FoxNews and on talk radio, who are riling people up to go to the protests in the first place.

I think the larger point about where the country is on this issue is that there has been a shift in attitudes toward taxes over the past few years thanks largely to Bush. Let's face it, during the Bush years, there was a direct correlation between taxes being cut and services being cut; between the amount people were paying to the government and the competence and effectiveness of that government. These teabaggers can whine all day about the big bad government but the truth is people are willing to pay for good government service. The idea that government spending or raising taxes on the rich while cutting taxes on everyone else somehow limits freedoms is, as most views the rightwing holds, a radical minority view.

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• America Changing On Taxes (oliverwillis.com)

Democrats Strengthen Plan for Middle Class Tax Cuts

The debate to end federal income tax detectability is back on the schedule this week in the Iowa Legislator. Democrats have revised their original plan after hearing from opponents and have strengthened the middle class tax cuts.

Here is information that I received from my State Senator over the weekend...

The middle-class tax cut will:

▸ Lower taxes

o Tax rates will fall for all Iowans.

o Taxes will be cut for more than 60 percent of taxpayers in our area.

o The overall tax cut totals $55 million.

o More than 881,000 Iowans will see their standard deduction increased by nearly $1,000.

o Nearly 75 percent of Iowa taxpayers – almost 1 million households – will either have a tax cut or no change at all to their taxes.

▸ Be better for families

o Iowa families will benefit from an increase in the child and dependent tax credit.

o Iowa households will benefit from an increase in the elderly and blind tax credit.

o Iowans will benefit from an increase in the Earned Income Tax Credit.

o Iowa college students will benefit from a new $100 refundable tax credit.

▸ Make Iowa more competitive

o Iowa’s tax rates will be more competitive for economic development and job creation.

o Iowa’s highest tax rate will be reduced by 22 percent.

A key to this plan to end federal income deductability is to lower our state income tax rates, which would make Iowa more attractive to out of state companies looking to locate here. Right now companies look at the tax rates and see Iowa with much higher rates than surrounding states. Ending federal income tax deductability improves Iowa's business climate.

Gronstal calls out Iowans for Tax Relief for being against tax relief

Latham Votes Against Middle Class Tax Cuts... Again

Tom Latham says he wants to help cut taxes, let people keep more of their money, and is against the death tax.

However, last week Latham voted against Barack Obama's budget that will cut taxes for middle class families, voted against eliminating the death tax for nearly every American, and earlier this year he voted against the largest tax cut in history.

• Cuts taxes for middle income families by $1.5 trillion and extends the 2001 and 2003 income tax cuts for taxpayers making less than $250,000 a year.

• Protects millions of middle-class families who would otherwise be hit by the AMT in 2010.

• Provides tax relief for small businesses.

• Permanently extends estate tax relief to ensure that 99.7 percent of estates in America never pay a dime of estate taxes.

Earlier this year, Representative Tom Latham opposed the Economic Recovery and Reinvestment Act, which cuts taxes for 95 percent of the American people, representing the largest middle class tax cut in history.

So what gives Rep. Latham? Do you want to cut taxes and let people keep more of their own money or do you want to think our economic situation is just fine and you want to continue the status quo?

Register: Democrats Botch Good Plan to End Federal Deductibility

The Des Moines Register wrote today that the Democrats have botched the handling of a bill that would end Iowan's ability to deduct federal income taxes. They, however, lay out a number reasons why the bill should pass.

Eliminating federal deductibility is a substantial change that would affect thousands of Iowans directly and personally, and legislative leaders owed them a fuller public discussion. That said, the idea makes sense, and the Democrats' goal of making Iowa's income-tax system more fair in the process is long overdue. In contrast to federal income-tax rates, which grow progressively larger with incomes, Iowa's income taxes fall too heavily on lower incomes.

Despite the overheated response from some critics, the Democrats' proposal would not result in tax increases for nearly everyone. According to the Iowa Department of Revenue, the change would result in increases for just over a third of Iowa households, with the most substantial increases affecting those with incomes above $125,000. For about two-thirds of households, there would be either no change or a tax cut. The net effect for the state treasury would be revenue neutral.

Another criticism is that the change would hurt small businesses. This complaint is made on behalf of owners of "Subchapter S" corporations, which are taxed differently from other corporations under the federal tax code. Under Subchapter S, a business's income is taxed not as corporate income but as personal income of the owners. Under the Democrats' plan, those individuals would lose their federal deduction, but their Iowa tax rates would go down. In general, they would pay more state income taxes if they earn more than $125,000. That's true for owners of any businesses, large or small.

According to some critics, eliminating federal deductibility means paying a "tax on a tax." For most, however, the change would not mean an increase in total tax bills. To account for the federal deduction, Iowa simply raised state rates. Which is why eliminating federal deductibility has been a goal of members of both political parties for many years: Compensating for deductibility has meant Iowa's income-tax rates look out of whack compared to other states. (Only two other states, Alabama and Louisiana, allow 100 percent deductibility.) By eliminating the deduction, Iowa can bring its rates down to be more in line with other states.

The Legislature could make this change in a way that does not raise or lower individual taxes, but that would miss an opportunity to make Iowa's income-tax system not only simpler and more competitive but more equitable for middle- and low-income Iowans. It's just too bad legislative leaders were not more open about the plan.

Debating Ending Federal Income Tax Deductabilty

The House held a public hearing tonight on rather to end the federal income tax deductability. I have been able to follow the happenings through Twitter.

Speaker Murphy had to clear the public from the House Chambers. Republicans are crying out that the taxpayers were kicked out while Democrats tried to push through a tax increase. I am sure Democrats have a different story.

Here's Radio Iowa's version...

A crowd of perhaps 600 Iowans was ordered out of the Iowa House tonight. It happened during a public hearing on a tax bill Democrats are advancing. The crowd was booted for failing to abide by the rules of the House which prohibit "demonstrations of any type from the gallery." (Those words in quotation in the previous sentence are posted on a sign located at the door that leads to the seating areas which overlook the House floor.) Many in the crowd booed and hissed at those who did not share their opinion. They applauded and cheered those who agreed with their point of view.

Iowans for Tax Relief president Ed Failor, Junior, seemed to get the largest burst of applause and cheers from the crowd. Later, Failor accused House Speaker Pat Murphy (D-Dubuque) -- the leader who ordered the crowd out -- of being "a Nazi."

The Democrats plan by ending the ability to deduct your federal income taxes they would be able to lower the tax rates and give the middle class a tax cut. The information I got at a legislative forum on Saturday was that if you make less than $127,00 then you would get a tax cut. The plan was endorsed on Sunday by the Des Moines Register and the Cedar Rapids Gazette.

The most interesting Twitter comment came from Rep. Chris Hagenow (R-Windsor Heights)...

Ed Failor Jr. gave a tremendous speech on respecting the Iowans that built our communities and the future contributors to our state.

To translate what Failor means... we should be respecting the Iowans that have money and who do everything in the community.

Currently, lower-income non-elderly households in Iowa pay a much greater share of their meager incomes in state and local taxes than high-income families pay according to the Iowa Policy Project (pdf). By ending the ability to deduct federal income tax, it would make the share each tax bracket pays more even and low income Iowans would no longer have to carry the load.

**Update at 10:20**
I watched the local news to see what spin they would put on this and it was surprisingly good. The antics allowed the news to share the facts. If you make less than $127,000 you get a couple hundred dollar tax cut. If you makes between $127,000 and $250,000 then you pay a few hundred dollars more. If you make more than $250,000 then you would pay just above $2,000 more.

**Update at 10:35**
John Deeth calls the out roar at the Statehouse a "Gucci riot."

...the Legislative service Bureau notes:

The income tax reform plan proposed by legislators would reduce average taxes for Iowans earning below $125,000 — but would be revenue neutral for the state because it would increase taxes for those earning above that level.

Revenue neutral. So calling the elimination of federal deductibility a "tax increase' is disingenuous. It's an increase for those more able to pay, and a decrease for people who need the help. Which, of course, is exactly why Republicans are so vehement.

Harkin Looks at Taxing Health Care Benefits

During the presidential campaign, Democrats railed against John McCain's plan to makes you pay income tax your health care benefits.



Last week, Sen. Tom Harkin came out saying that he is willing to look into taxing health care benefits.

"The more we start looking at it, the more briefings I get, this may be, if it's done right ... a good source of revenue to provide better benefits for everyone," Harkin told reporters during a conference call.

Harkin said he would support shielding low-income workers from the tax if such a measure was proposed. [...]

The concept was at the heart of the health care plan proposed during the 2008 presidential campaign by Republican nominee John McCain, an Arizona senator. [...]

Harkin is a senior majority member of the Senate Health, Education, Labor and Pensions Committee. He is in charge of drafting language dealing with disease prevention and public health policy for a health-care reform bill expected this spring.

This is a ridiculous position and would encourage more businesses to not offer health care benefits and more people to forgo the insurance benefits from their employer.

Republicans in Congress to Inroduce Their Budget Next Wednesday

Barack Obama has baited Republicans in Congress to lay out their own budget instead strictly criticizing his. Yesterday, Republicans promised to propose their budget next Wednesday.

Well, do you know when they've repromised to deliver it?

Wednesday.

Wednesday, April 1.

April Fool's Day.

The GOP is now promising to deliver its budget on April Fool's Day.

One of the their highlights is to simplify the tax code by making everyone who makes over $100,000 pay a 25% tax rate. That would reduce the the tax rate for the super rich from 35%. It is basically the Bush Tax Cuts on steroids.

Anti-Tax Group Opposes Tax Cut for 75% to 80% of Iowans

Speaker of the House, Pat Murphy said yesterday that the Iowa House is looking to end the ability of Iowans to deduct federal tax payments and use that money for middle class tax cuts.

In an interview with The Associated Press, Speaker Pat Murphy said there's a good chance lawmakers will take up the proposal in the closing weeks of the legislative session. He said ending the deductions would bring in hundreds of millions of dollars that would enable the state to reduce tax rates for most Iowans.

''It's something that we need, to eliminate federal deductibility and throw it into the rates,'' said Murphy, D-Dubuque. ''Seventy-five to 80 percent of all Iowans will see a tax cut.''

Legislative leaders are counting votes to determine if they have backing for the tax changes, Murphy said.

''If we take it up, we'll have the votes for it,'' he said.

However, Ed Failor Jr. and the Iowans for Tax Relief oppose a plan to Iowa's tax code that would give 75% to 80% of Iowans a tax cut.

The head of an anti-tax group promised a high-profile campaign to build opposition to the proposal.

''We're going to do direct mail. We're going to do radio. We're going to do television. We're going to do what we do,'' said Ed Failor Jr., president of Muscatine-based Iowans for Tax Relief. ''Their phones are going to light up.''

Failor said staffers are working out the details of the campaign, with commercials already produced and ready to air.

I thought the Iowans for Tax Relief would be in favor of tax cuts for the vast majority of Iowans. Instead it seems they are only in favor of tax cuts for the top 20% to 25% of Iowans.

Obama The Tax Cutter

Obama signed one of the largest tax cuts in history Tuesday when he signed the American Recovery and Reinvestment Act.

Marc Ambinder says this could come in handy in 2012...

It's hard imagine we won't hear about this four years from now. And if that's not boxing a future Republican candidate in ahead of time, I don't know what is.

Think about how many potential Republican arguments are going to be pre-empted by that nice little fact?

Tax Cuts, Tax Cuts, Tax Cuts

Sen. Sherrod Brown (D-OH) talks about how the Republicans only answer to any problems is tax cuts and that hasn't worked out so well the past 3 decades.

The Republican answer to everything is tax cuts, we've tried it for eight years it hasn't worked for the economy, that's what they always say...Their answer is always tax cuts no matter what the question is and it simply hasn't worked. We've had eight years of deregulation, privatization and tax cuts for the rich and look where it's gotten us. It's not a surprise that this economy's in such bad shape because of those policies, we don't want to do more of them.

Sorry Paris Hilton, the Estate Tax is Here to Stay

The Wall Street Journal is reporting Barack Obama is going make sure the estate tax, or Death Tax, does not expire in 2010.

The reasoning why is a great example of framing the issue...

Perhaps the most important reason for the death of the “Death Tax” movement is what might be called the Paris Hilton affect. In 2001, with inequality mostly a buzzword among a few left-wing professors, it was easier to get public support for killing a tax on the wealthy. Many Americans felt they could become wealthy someday, too, so they opposed any punitive tax on their imagined futures. That was especially true in 2006, when Congress took up repeal again and Americans felt newly wealthy because of rising home values.

But in the intervening eight years, the nonwealthy actually became less wealthy and Americans realized they would be lucky to retire at all, let alone get rich enough to become the target of an estate tax. They also resented the rich Wall Streeters and corporate chiefs who lost so much of other people’s money and publicly paraded their wealth.

Capping it off was a populist branding campaign that was just as clever as the “death tax” brand. The term was “The Paris Hilton Relief Act,” suggesting that abolishing the estate tax would merely give more money to wasteful, dog-and-diamond-toting heirs such as Ms. Hilton. Mr. Obama used the term in 2006 when he said the “Paris Hilton tax break” would give “billions of dollars to billionaire heirs and heiresses.”

Tax Breaks Bleed State Revenue Dry

The Des Moines Register writes today about how tax breaks are bleeding Iowa's state revenue dry.

Hundreds of millions of dollars are spent each year on tax incentives and grants for Iowa’s businesses or residents, some of which are depriving the state of revenue, tax reform advocates say.

And legislative leaders - who acknowledge they are facing the greatest financial squeeze since the 1980s farm crisis - say it's time to evaluate and possibly chop some of the incentives when the 2009 session of the Iowa Legislature convenes at 10 a.m. Monday.

Up for grabs are more than 200 sales, income or property tax exemptions as well as dozens of tax credit programs that range from tax breaks for the purchase of argon gas to programs that refund millions of dollars every year to companies doing research in Iowa.

The exemptions - many decades old - were put into place for Iowa to remain or become competitive for high-paying jobs and skilled workers.

But many of the incentives have been on autopilot, dragging on for years without an examination of what benefits they provide to Iowans.

One of the programs discussed is the Iowa Values Fund. The Values Fund has spent $50 million for the past 10 years to offer financial assistance to companies that create jobs in the state. The Values Fund has been very controversial with opponents on both side of the aisle.

The question shouldn't be about raising taxes or cutting taxes. The question is about outdated tax breaks that are handed out to people that don't need them.

Iowa May Consider Raising the Gas Tax

The Des Moines Register writes that Iowa may consider raising the gas tax during this legislative session.

A coalition of Iowa highway lobby groups will seek at least a nickel-per-gallon increase in the state's gasoline and diesel taxes during the annual session of the Iowa Legislature that convenes on Monday.

The issue matters because the state's aging network of 113,786 miles of roads is wearing out from decades of use and extreme weather.

More money is needed to maintain the road system and make improvements to support economic development, fuel tax supporters contend. A 5-cent increase in fuel taxes would raise an additional $105 million annually for city, county and state road projects. Road construction projects nationwide are also expected to be a major part of President-elect Barack Obama's economic stimulus plans.

A motorist who purchases an average of 20 gallons of gasoline per week would pay an additional $52 per year if a 5-cent-per-gallon tax increase is approved. Highway engineers contend that if needed road and bridge repairs are ignored, taxpayers will face steeper repair bills in the long run as infrastructure conditions worsen.

House Speaker Pat Murphy is quoted in the article that raising the gas taxes would create 4,000 to 5,000 construction jobs and a bill will be considered in the House. Senate Majority Leader Mike Gronstal said for the bill to be brought up in the Senate that it would need broad bipartisan support.

When Republicans Say Middle Class, They Mean Millionaires

I find it really annoying when Republicans say they want to help the middle class, but actually mean millionaires.

From Matthew Yglesias...

On Sunday, Mitch McConnell’s proposed cutting the 25 percent income tax rate to 15 percent, which he described as a move to help the middle class. As usual with conservative tax proposals, this is true as long as you see “the middle class” as primarily composed of extremely wealthy people. Ben Furnas points to new analysis from the Tax Policy Center:

As economic stimulus, meanwhile, anything that — like McConnell’s proposal — would do nothing at all for folks earning less than $40,000 is a terrible idea. You need to direct tax relief at people who have a high propensity to spend a marginal dollar, even in a climate when there are some deflationary expectations. That means first poor people, second middle class people, and not at all the $2.8 million a year crowd that McConnell’s trying to help out.