As the Senate takes up the vote on extending emergency federal unemployment insurance today, one argument by opponents is that it should be paid for.  The good news for opponents of helping jobless workers is that there is a bill to do just that AND start to re-balance our deficit reduction efforts.

The Stop Tax Haven Abuse Act would raise $220 billion over the next decade by closing corporate tax loopholes that provide no economic benefit and reward profitable companies that offshore their profits or otherwise seek to evade taxes.  In some cases, these companies are rewarded for shipping jobs overseas too.

So if opponents are serious about their new-found fiscal responsibility, they should move the Stop Tax Haven Abuse Act to the floor without haste.  But they should not fail to extend unemployment insurance payments to jobless workers in the meantime.

Jobless workers continue to face too few jobs and mounting financial pressure that will flood the economic recovery. The Congressional Budget Office estimates that failing to extend emergency federal unemployment could result in the loss of 300,000 jobs as jobless workers fail to spend in the economy and businesses stop hiring or cut back.

Closing corporate loopholes and extending unemployment insurance at this fragile point in the recovery would not only be good for the economy but makes good fiscal sense.

 

While much of the focus of unemployment insurance changes made last session has been on the negative impact it will have on workers who have lost their job through no fault of their own (and for good reason), relatively little has been written about the financing changes that impact employers.

This is an important piece of the story.  Employers have always paid unemployment insurance taxes on covered employees as the source of funds for the unemployment insurance system. North Carolina’s average employer contribution prior to HB4 ranked the state 30th for its low level. And yet, policymakers undertook very few changes to the way in which employers will pay into the unemployment insurance system moving forward putting the system at potential risk when another downturn happens.

Among the changes that went into effect on January 1 are:UI Employer Contribution Estimates

  • The elimination of a zero tax for approximately 24,000 employers so that everyone is paying into the system. Ensuring all employers paid in was a good change.
  • The increase in the maximum rate to 5.76 percent will be insufficient to address the long-term solvency challenges of the system and results in roughly an additional $15 per employee in taxes.
  • Finally, the adoption of a formula approach rather than tax schedules will mean that some employers will pay a lower tax rate than under prior law despite being similarly situated. Small changes in their number of employees could also drive significant changes in their tax levels.

Bottom line is that the combined impact of tax and benefit changes will mean employers will pay far less than they would have under the previous system.  And there were better choices available.

Earlier this week my colleague posted a profile of corporate tax dodging by Yum! Brands.The folks at American for Tax Fairness have a new blog post on the scale of tax breaks for  profitable corporations and the wealthy just in time for Thanksgiving.

America’s most famous meal, Thanksgiving draws needed attention to the scandal of hunger within the world’s richest nation. Even though one in seven U.S. households were “food insecure” in 2012, nutrition assistance programs have been repeatedly cut in recent years. By closing tax loopholes, we can ensure everyone has enough to eat, on Thanksgiving and throughout the year. Cost of 31.5 Million 10-Person Thanksgiving Dinners: $1.5 billion.

Mortgage interest was made deductible to encourage middle-class home ownership. But wealthy families can use the same break for fancy vacation homes—and even for yachts (“Qualified Home”). Believe it or not, anything with sleeping quarters, a kitchen and a bathroom counts as a mortgage-deductible home to the IRS. So even as millions of American homes were “going underwater” during the mortgage crisis, the “second homes” of many rich families floated securely on top. Annual Tax Break: $1.5 billion

To understand the history and work of the highly-esteemed North Carolina Fund, the scope and nature of poverty in North Carolina at that time is needed.

The 1959 U.S. Census found that 40.6 percent of North Carolina’s population was living in poverty, almost twice the national average and the second worst among South Atlantic states.  North Carolinians at that time earned some of the lowest industrial wages in the country, and nearly half left high school before obtaining a diploma. The combined effect of low-wages and low educational attainment was disastrous just as the state was experiencing the fall-out from increased automation and the resulting declining need for low-skilled workers in the factories.

As the economic transformation was beginning to take hold in North Carolina, Governor Sanford recognized that for the state to be competitive there was a need for policymakers to work to diversify the economy, improve public education, and reduce the reliance on low-wage industry.

But first, there remained a growing difference in the quality of life and access to opportunities of North Carolinians depending on where they lived. For many areas of the state, the mountains and eastern coast particularly, infrastructure was limited.  Water and sewer still hadn’t reached many communities in the mountains and roads to facilitate connections to jobs remained limited for more rural parts of the state.  And in urban communities too, the physical deterioration of housing and the concentration of poor families in poor neighborhoods—driven primarily by segregation—created the stark difference of economic experience.

The county-level poverty rates variedPoverty in 1959 by County from a low of approximately 22.9 percent in Forsyth County to a high of 74.3 percent in Greene County in 1959, as illustrated in the map below. Fifty-two of the state’s 100 counties were experiencing poverty rates above 50 percent, meaning more than 1 in 2 of North Carolinians living in these counties lived in poverty.

In 1963, Governor Sanford turned to the issue of the state’s high poverty levels in order to push for greater economic success for the state as a whole.  The North Carolina Fund was the result and its approach reflected the need for physical infrastructure and the development of human and social capital in communities so that viable pathways to the middle class could be established.

North Carolinians’ struggle to put food on the table for their families has gotten more attention of late. North Carolina catapulted to the dubious distinction of being the state with the fourth highest level of food insecurity in the latest data release by the USDA.  State policymakers, during the federal government shutdown, then tried to cut off WIC vouchers, being one of the first in the nation to do so.  And now we are approaching the November 1st deadline when cuts to the benefit amount for food stamps or the Supplemental Nutrition Assistance Program will make it more difficult for more than 1 million families to put food on the table.

Today, as various groups recognize “Food Day”, another aspect of the challenges to meeting basic nutritional needs is being highlighted:  the lack of places to buy healthy food in many communities.  In North Carolina, the Support Center has found, twenty six percent of North Carolina’s census tracts do not have a healthy food retailer within a half-mile of their community.

The presence of food desertBTC_Food Desertss is another issue.  Communities in a food desert require travel (more than a mile for an urban area and more than 10 miles for a rural area) to reach a retail outlet or other place where food is sold.  That presents challenges particularly for low-income families that often don’t have flexible or reliable transportation. The map here shows that many food deserts exist throughout the state.  Nearly 60 counties have at least one food desert and some many more.

A lack of proximity to the places where food is sold is particularly disturbing when at the same time North Carolina continues to produce significant pounds of vegetables and other produce year round.  Greater connections are being made through local farmer markets and farm to school initiatives to ensure that consumers and growers can be connected.

One additional policy idea that has been effective in other places is a state-funded Healthy Food Financing Initiative, which provides capital to retailers and businesses that seek to expand access to healthy foods in communities that are underserved. This is a win-win in meeting the nutritional needs of North Carolinians and supporting job creation, business anchors, and the revitalization of commercial districts in the state.