DES MOINES, Iowa (AP) — The Iowa Senate has unanimously approved a tax cut for low-income workers Tuesday, with backers calling it a powerful tool against poverty.
"Iowa's working families will spend this tax cut in their local communities, buying food, milk, gas, repairing the family car and paying medical bills," said Sen. Joe Bolkcom, D-Iowa City, the measure's main backer. "It helps working families. You must have a job to benefit from this tax credit."
Critics said they would have preferred a broader tax proposal that would not only help the working poor but spark the economy as well.
"This is just one piece," said Sen. Randy Feenstra, R-Hull. "I urge the body to put together a full and comprehensive tax plan."
The Senate voted 48 to 0 to approve an increase in the state's earned income tax credit, which is currently 7 percent of the federal credit. It would almost double to 13 percent in the first year, costing the state $26 million, and gradually grow to 20 percent, costing the state $54 million a year by 2014.
Bolkcom said the bill would cut taxes for 260,000 families that include about 500,000 people and 37 percent of the state's children. Generally, it cuts taxes for families making less than $45,000 a year, he said.
The measure now goes to the House, where approval is expected.
The Legislature passed the measure twice last year, but it was vetoed both times by Republican Gov. Terry Branstad.
Branstad spokesman Tim Albrecht said the governor wants to study the final version before deciding whether he will sign the measure this time around.
"Until we see a final proposal, the governor is not prepared to say whether he would sign or veto that," he said.
Bolkcom said he hopes some minds have been changed since last year, particularly the governor's.
"This is the third time the working family tax cut has passed the Senate," said Bolkcom. "I hope the third time's the charm."
Feenstra said the federal tax credit was pushed by former President Ronald Reagan, and Republicans are comfortable supporting the effort, particularly in light of a soft state economy.
"Right now it's really needed," he said.
Sen. Mark Chelgren, R-Ottumwa, said the thrust of the measure encourages work and he's comfortable with that direction.
"We are dealing with people who are hard workers who are at or near the poverty level," said Chelgren. "Should we be doing more to help people at or near the poverty level? Absolutely."
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