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$13.47 FOR YOUR EXCHANGE STUDENT

January 12, 2006

The federal tax law lets you take a $50 charitable deduction for each month that you have an exchange student in your home. SF 2003 proposes to boost this to $200 for Iowa returns.

Leaving aside the questionable wisdom of a federal charitable deduction for this (it's a nice gesture, I suppose, but who really is doing this expecting a deduction?), what is the point of making the rule different for Iowa? At the top 8.98% individual rate, this would be $13.47 per month. Most teenagers consume that in milk alone. Nobody is going to adjust their bahavior because of this law, with the exception of tax software companies.

This is a classic example of a proposal that makes for a more complicated tax law with trivial compensating benefits. Iowa should avoid making its computations different from the federal rules in almost all cases.

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Comments

Perhaps it's intended to reimburse said exchange students (who would ordinarily be allowed to consume alcohol and cigarettes in their home countries) for the costs of some of the proposed tax increases. If we can't keep our own youth in state we'll have to settle for Balki Bartokomous. After all, who will empty the bedpans of all those seniors when Des Moines becomes Del Boca Vista Norte?

Posted by: chad | January 12, 2006 1:40 PM