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FOR IMMEDIATE RELEASE:

Report: Invert State Tax Structures To Eliminate State Budget Deficits

United for a Fair Economy Releases Flip It to Fix It:
An Immediate, Fair Solution to State Budget Shortfalls,
Documents Current Regressive State Tax Structures

Des Moines, IA (May 23, 2011): As the Iowa Legislature and Governor’s office remain locked in deadlock on the state budget, local advocacy organization Iowa Citizen Action Network (ICAN) joins national and state groups across the country in releasing an important new report.

A new study has found that inverting state tax structures—whereby the highest income earners would be taxed at the current percentage of income for the lowest income earners, and vice versa—would collectively raise $490 billion in new revenue, immediately eliminating states’ budget deficits and avoiding the serious consequences of budget cuts.

The report, titled “Flip It to Fix It: An Immediate, Fair Solution to State Budget Shortfalls” was released today by Boston-based United for a Fair Economy and 13 state organizations around the country.

“Flip It to Fix It” attributes a large part of states’ current deficits to the regressive tax structures that the report shows are designed to fail. “Trying to raise adequate revenue through a regressive tax structure—where a greater percent of income is demanded of the poor than the well-off—is like trying to squeeze water from a stone,” said Karen Kraut, coordinator of state tax policy at United for a Fair Economy and co-author of the report.

Currently the lowest earning 20% of Iowa’s population is taxed 11% while the highest earning 20% pays only 7.8%. The “flipped” tax structure calculated in this study would reverse that and in the process increase Iowa’s total revenues by more than 20% -- nearly $2.5 billion. Sue Dinsdale, Executive Director, Iowa Citizen Action Network explained the significance, “Restructuring Iowa’s revenue system like this would raise more than twice the amount the Governor’s office has projected as Iowa’s looming state “deficit” – with no cuts whatsoever to education, public safety, and consumer protection. Iowa’s recovery and future prosperity depend on sound investments in our people and infrastructure and for this we need sustainable revenue.”

“The inadequacy of regressive tax structures puts everything we value at risk: the well-being of families, the future competitiveness of the American workforce, and the nation’s ability to rebound from the recession and prosper,” said Kraut.

The report contends that an inverted tax structure not only solves budget crises, but increases equity and best spurs steady and strong economic activity.

“This report supports our position that Iowa’s budget challenges are tied to our state’s antiquated and regressive tax policies,” said Dinsdale. “ICAN has long contended that our state has a revenue problem, not a spending problem – and this report supports that conclusion. To address our budget concerns for the next year we need a balanced approach that makes wise spending choices and also assures adequate revenue to meet our citizens’ needs. This is no time to be cutting taxes. We cannot afford it.”

The report calls on states to adopt its proposed progressive tax reforms, many of which are immediately achievable and will help solve state deficits.

The full report and state-by-state information is now available at http://www.faireconomy.org/flipitreport.

To schedule an interview with the authors of the study and/or representatives from state organizations, please contact Shannon Moriarty at smoriarty@faireconomy.org or (617) 824-0069. Video statements are also available at http://www.faireconomy.org/flipitreport.

Iowa Citizen Action Network is a partner of United for a Fair Economy through its program, the Tax Fairness Organizing Collaborative, a network of statewide organizations in 24 states working to reduce economic inequality through progressive tax reform.,?em>