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Wednesday, April 01, 2009

John Deeth Blog: Republican rhetoric on federal deductibility is about the rich

Excerpted from this post at John Deeth Blog

Republicans are responding to the effort to restructure Iowa's income
tax system to help working families and eliminate federal
deductibility in typical fashion: with a simplistic slogan ("Tax on a
tax") and a screaming performance at a conservative-packed legislative
hearing Tuesday night. But once you actually LOOK at the proposals,
you see why the Republican puppet masters are so upset. The Iowa
Policy Project notes (.pdf): "Federal deductibility overwhelmingly
benefits higher income taxpayers, since most low-income taxpayers
don't pay any federal taxes. A 2003 analysis of Iowa's income tax
system found that 80 percent of the benefits from federal
deductibility went to the wealthiest 20 percent of Iowa taxpayers." My
own anecdotal example: The federal refund goes to cover what I owe the


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