NC Budget and Tax Center

More than a million North Carolinians missing out on millions of dollars in stimulus payments

Tens of millions of Americans and more than a million North Carolinians risk losing out on the stimulus payments provided through the recent CARES Act. These payments of $1,200 to individuals and $2,400 to married couples are a crucial lifeline during the economic and health crisis of the COVID-19 pandemic.

Under the current structure of the CARES Act payments, about 370,000 North Carolinians miss out on these dollars because they are older than 17 and claimed as a dependent on their parents’ taxes. An additional 300,000 North Carolinians are ineligible because they, or someone in their household, files taxes using an ITIN (Individual Tax Identification Number).

About 12 million Americans — including 469,560 North Carolinians — risk missing out on the stimulus payments if they do not file a form to receive it, according to a new report from the Center on Budget and Policy Priorities (CBPP).

The CARES Act payments are a key tool to help families cope with the loss of jobs and income in the pandemic and stimulate the economy. Aggressive outreach can help reach the 469,560 North Carolinians who risk missing out on the CARES Act stimulus payments because they did not file a tax return, many of whom are very low-income families with children, people who have been disconnected from work opportunities for a long period, and low-income adults not raising children in their home.

The payments are important for providing stabilizing cash income to households. Cash income has been found to provide near-term benefits in balancing the costs of basic or emergency needs, as well as long-term benefits to educational attainment, economic mobility, and better health outcomes. The IRS, working with the Social Security Administration and the Department of Veterans Affairs, has been automatically delivering these payments to tens of millions of people who regularly file federal income taxes or receive certain federally administered benefits. But the automatic payment method misses about 12 million people nationally — including people of color, children whose parents are paid low wages, people without secure housing, and others — because they aren’t required to file federal income tax returns due to their low incomes and do not participate in one of those specified, federally administered programs.

According to the report:

“This group of non-filers eligible for payments are disproportionately people of color because they are likelier to have lower incomes due to historical racism and ongoing bias and discrimination. Ensuring that low-income people of color receive the payments for which they qualify is especially important given emerging evidence that they are being hit hardest by both the economic and health effects of the pandemic.”

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COVID-19, NC Budget and Tax Center, public health

State and federal policy responses to the COVID-19 virus

This blog post will be regularly updated to capture key policy responses to the COVID-19 virus. (Last updated 1:45 p.m. Tuesday, March 24)

Reports from Budget & Tax Center Staff

This post summarizes steps taken thus far at both the federal and state levels. Scroll down to see a list of steps taken so far, or click on the following links to bring you directly to a specific section:

COVID-19 provides a sobering reminder of how much we need effective and well-resourced governance at the state and federal levels. Particularly in times of crisis, we need an infrastructure that delivers a coordinated, seamless response and reaches each and every person in the community.

The coming months will test federal and state leaders’ ability to blunt the impacts of this global pandemic and contain the harm to the health, well-being, and economic security of people.

Decades of tax cuts have left us vulnerable to a moment like this. Conservative leaders in Raleigh and Washington have given huge tax breaks to rich people and multinational corporations instead of building the systems we need to respond with a coordinated and collective set of programs.

Years of policies that attacked the very institutions that are so critical now have made the response more fragmented and challenged.  Our public health agencies are under-resourced for the growing complexities and services needed in the face of this new coronavirus pandemic coming on top of a very bad flu season. Our public schools haven’t received adequate resources to provide classroom materials and technology in school, let alone outside of it, and many school personnel are worried about their ability to make ends meet in this time. Indeed, many workers will struggle to make ends meet if their hours are scaled back, they get sick, or they lose their jobs because our policy choices have failed to provide access to affordable health care, paid sick days, and a strengthened unemployment system.

COVID-19 is likely going to have an even broader economic impact going forward and could push the United States into a full-blown recession.  Strengthening our programs that can automatically stabilize the economy by helping people make ends meet is critical, as will be aid for states to maintain balanced budgets without dramatic cuts to programs and services needed now.

In short, North Carolina will need a robust policy response at the state and federal level.

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NC Budget and Tax Center

Expanding the EITC in North Carolina could save lives

Each year, the federal Earned Income Tax Credit (EITC) lifts millions of adults and children out of poverty. Given the  detrimental impact of poverty on health, there is significant research that demonstrates that the credit has a broad positive impact on many aspects of health. Expansion of the federal EITC, and refundable state-level EITCs have been shown to improve the health and wellbeing of working families by increasing nutritious food consumption, ensuring more babies are born at a healthy weight, improving physical and mental health, and reducing death by suicide.

While poor and low-income families with children have benefited tremendously from the EITC, childless workers, non-custodial parent workers, and older workers have been missing out on the EITC’s full potential for improving health and wellbeing. At its maximum value, the EITC is up to twelve times more generous for a worker with three or more children than it is for taxpayers without children.

A new report from the Institute for Taxation and Economic Policy (ITEP) highlights the state impact of increasing the value of the credit for workers without children. The report focuses on the impact of an age-enhancement for childless workers 18-24 who are just entering the workforce and generally have fewer assets and savings, workers 65 an older who are working well into retirement age, as well as increasing the value of the state credit to match 100 percent of the value of the federal credit; North Carolina does not currently have a state credit.

In North Carolina, an enhancement for young childless workers would impact more than 175,000 individuals, or more than 10 percent of the population of the state. An enhancement for workers 65 and older would impact about 46,000 North Carolinians.

Reinstating a generous and refundable state-level North Carolina EITC and enhancing the value of the credit for childless workers holds compelling potential to improve physical and mental health and decrease deaths by suicide in our state.

New research links receiving EITC with a decrease in premature deaths by suicide. A recent reversal in the historical trend of increased life expectancy in the United States has been attributed to deaths related to alcohol and drug abuse and suicide. These so called “deaths of despair” have been associated with the stress and despair resulting from stagnant wages, a lack of economic opportunity, and increased economic insecurity among individuals without a college degree. Recent research found that a 10 percent increase in EITC reduces death by suicide among adults with a high school education or less by 5.5 percent, with more pronounced effects for those populations with higher rates of EITC receipt. The impact of EITC on reducing deaths by suicide is even more significant for women, who tend to be more likely to be eligible for EITC. Specifically, the study found that a 10 percent increase in state EITC credits leads to a 7.4 percent reduction in suicide deaths among women.

Reinstatement of the North Carolina EITC, along with expansions for childless workers, has the potential to help reduce extreme financial-related stress and save lives in North Carolina.

NC Budget and Tax Center

“Raise the Age” law will require significant new appropriations

North Carolina was the last state in the U.S. to end the automatic prosecution of 16- and 17-year-old juveniles as adults when the General Assembly passed the Juvenile Justice Reinvestment Act (JJRA) in 2017. As a result, 16- and 17-year-olds charged with non-violent crimes on or after Dec. 1, 2019, will be considered to be under the jurisdiction of the juvenile justice system, pursuant only to specific exceptions.

Often referred to as “Raise the Age,” the JJRA is overseen by the Juvenile Jurisdiction Advisory Committee, a group comprised of court counselors, judges, human services professionals, law enforcement, juvenile law experts, and others with years of experience related to juvenile justice tasked with bringing recommendations to ensure the effective implementation of JJRA. Successful implementation hinges on the adequate funding of the JJRA.

The Juvenile Jurisdiction Advisory Committee recommended state funding for successful implementation of the act as follows:

  • Juvenile Justice: $47.6 million in FY 20; $62.7 million in FY 21; and $57.3 million annualized.
  • Administrative Office of the Courts: $2.9 million in FY 20; and $2.8 million annualized.
  • Office of the Juvenile Defender: $122,000 recurring beginning FY 20.
  • Conference of District Attorneys: $125,589 recurring and $3,752 non-recurring beginning FY20.
  • The Committee also recommends funding the courts’ existing deficiencies $15.1 million in FY 20; and $14.5 million annualized.

The breakdown includes funding for court services, detention operation, educational and vocational training and related career planning and support, and Juvenile Crime Prevention Councils. A signature component of the Raise the Age approach, Juvenile Crime Prevention Councils (JCPC) bring community leaders together to review the needs of juveniles in the county who are at risk of delinquency or who have been adjudicated delinquent. JCPCs review existing services and make determinations about service and resource gaps to address youth needs, and evaluate program performance in order to ensure appropriate and effective resources exist to meet identified needs of system involved youth, with the ultimate goal of preventing interaction with the both the juvenile and adult criminal justice systems.

So far, proposed budgets fall short of full funding for Raise the Age. Read more

Commentary, NC Budget and Tax Center

Fifteen great ideas that were lost in the legislature’s crossover deadline shuffle

The North Carolina General Assembly passed its self-imposed “crossover” deadline last week — the date by which many bills must be approved by at least one house to remain eligible for final passage this session. While the crossover rule is more of a guideline than a hard and fast requirement and is regularly ignored by legislative leaders, one can, by surveying the aftermath, get a good indicator of the priorities of legislative leaders and where the session is headed.

Unfortunately, but not surprisingly, this year’s deadline passed without consideration of a raft of excellent proposals that would have helped advance economic opportunity in our state. Here are 15 of those proposals that were lost in the crossover shuffle:

HB 46, Economic Security Act of 2019 — Sponsored by Representatives Fisher and Harrison, this bill was intended to increase the economic security of working North Carolinians. The bill would have increased the state minimum wage and tipped minimum wage, eliminated gender-based discrimination in pay, required employers to provide paid sick and family medical leave, attacked the state’s wage theft crisis, repealed collective bargaining restrictions for public employees, enacted a state-level Earned Income Tax Credit and Child Tax Credit, and enacted a “ban the box” provision in order to assure that job applicants with criminal records get a better opportunity to enter the workforce.

HB 5/SB 3, Close the Medicaid Coverage Gap — With this proposal, lawmakers in both houses sought to expand Medicaid to close the coverage gap for the 500,000 uninsured North Carolinians who lack adequate access to health care due to their lack of health insurance coverage.

HB 968, Local Government Inflation-Adjusted Minimum Wage — Representatives Farmer-Butterfield and Smith sponsored this bill to provide an inflation-adjusted living wage for local government employees, in order to ensure that they can afford to continue their work in the public sector.

HB 762, Nutritional Assistance for Employment Deserts — Representatives Queen, Turner, Ager, and Gailliard sponsored this bill with the intention of increasing access to food assistance for struggling job seekers. The bill would have allowed for a waiver of the time limits associated with the SNAP able-bodied adult employment requirements. With such a change, able-bodied adults would be able to continue to receive food assistance despite work requirements if they live and are seeking employment in an economically-depressed locale where a lack of available jobs makes the state’s current three-month time limit to find work prohibitive.

HB 946, Free Lunch for Some Students/Stop Lunch Shame — With this bill, Representatives Brockman, and Horn sought to appropriate $5 million to pay for the portion of school lunch not covered by federal funds for those students who are eligible for reduced priced lunch. The bill also requires schools to direct any communications about meal debt to parents rather than children, and cease any behavior that identifies or stigmatizes children who cannot afford a school meal or owe a meal debt.

HB 947, Free Breakfast and Lunch in K-12 Public Schools — Representatives Brockman, Quick, and Autry introduced a similar bill to appropriate funds to provide breakfast and lunch at no cost to students of the public school system.

HB 319, In-State Tuition Equity — Representatives Meyer, Fisher, Harrison, and Brockman sponsored this bill with the intention of increasing educational and future employment opportunities for all North Carolina youth. The bill would have extended the in-state tuition  rate for public colleges and universities to immigrant youth, regardless of immigration status, who attended North Carolina schools for at least two consecutive years or received a high school diploma from a North Carolina high school.    Read more