NC Budget and Tax Center, Trump Administration

In N.C., 42% of Trump’s proposed tax cuts would go to the few making more than $1 million

On July 27, the White House released a statement on Tax Reform that stated tax-writing committees in Congress would work this fall to “develop and draft legislation that would result in the first comprehensive tax reform in a generation.” The White House statement was blunt in stating “the American people have elected a President and Congress that are fully committed to ensuring that ordinary Americans keep more of their hard-earned money.”

However, a newly released report confirms that the White House is not really interested in tax reform that helps “ordinary Americans”. Instead, under President Trump’s proposed tax cut plan, “ordinary Americans” will hardly benefit at all, as nearly half of Trump’s proposed tax cuts would go to people making more than $1 million annually, according to the report by the Institute for Taxation and Economic Policy (ITEP).

As it pertains to North Carolina, the new report is clear in pointing out:

“A tiny fraction of the North Carolina population (0.5 percent) earns more than $1 million annually. But this elite group would receive 42.4 percent of the tax cuts that go to North Carolina residents under the tax proposals from the Trump administration. A much larger group, 50.8 percent of the state, earns less than $45,000, but would receive just 5.9 percent of the tax cuts.

The first group, the millionaires, would receive an average tax cut of $150,550 in 2018, equal to 6.4 percent of their income. The second group, those making less than $45,000, would receive an average tax cut of just $190, equal to 0.8 percent of their income.”

That report concludes with the confounding fact that the Trump tax principles would also reduce revenue in the U.S. by at least $4.8 trillion over 10 years. If this drastic approach took effect at the federal level it would put NC and our local governments at risk, as our state would not be able to sustain vital programs that help people thrive due to the costly tax cuts at both the federal and state level. In a recent brief the NC Budget & Tax Center stated: “The costly tax cuts in the new [NC] budget represent missed opportunities by lawmakers to ensure that the needs of a growing state are adequately met and to boost public investments that promote opportunity and broadly shared prosperity.”

If you are wondering how all of this is possible, here are the known Trump tax cut proposals that would primarily help the super-rich and would reduce U.S. revenues by $4.8 trillion over 10 years:

– Repeal of the 3.8 percent tax on investment income for the rich.
– Repeal of the Alternative Minimum Tax.
– Repeal of personal exemptions and doubling of the standard deduction.
– Replacement of current income tax brackets with three brackets: 10 percent, 25 percent, and 35 percent.
– Elimination of all itemized deductions except those for charitable giving and home mortgage interest.
– Special tax rate (15 percent) for businesses that do not pay the corporate income tax.
– New deduction and tax credit for child care.
– Repeal of special tax breaks for businesses and reduction in the corporate income tax rate from 35 percent to 15 percent.
– Repeal of the estate tax.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

A look at the seven N.C. Counties that will be on the Eclipse’s “path of totality”

Next Monday, Aug. 21, the continental U.S. will experience a total eclipse of the sun from coast to coast for the first time in 99 years, and North Carolina is one of the 14 states that will be in the eclipse’s “path of totality.” Across the U.S., 290 counties will be in the path of totality, and seven of these counties are here in our state.

The seven N.C. counties that will be in the path of totality include: Cherokee, Graham, Swain, Clay, Macon, Jackson and Transylvania.

That the solar eclipse will draw millions of people to mostly rural counties across the U.S. is no secret. However, what might be unknown on that day to millions of travelers is the actual population and poverty rate of the rural county that they are visiting, and what it truly looks like when the sun does shine.

Here are the populations, poverty rates, and interesting facts about the seven N.C. counties that will be in the eclipse’s path of totality. It is worth noting that five of the seven counties have a poverty rate that is higher than the state average (16.4 percent), six of the seven counties have a median age that is significantly higher than the state median age (38), and the combined population of the seven counties (175,016) is equivalent to double the population of Asheville.

A look at the seven North Carolina counties that will be on the Eclipse’s path of totality

County

Population

Poverty Impacts (State average: 16.4%)

Median Age (State Median Age: 38)

Interesting Fact

Cherokee

27,935

18.3% of county
residents (4,902 people)

50

Is the westernmost county in NC.

Graham

8,684

21% of county
residents (1,783 people)

45

Is the only dry county in NC (the only one in which alcohol sales are forbidden).

Swain

15,256

16.2% of county residents (2,295 people)

41

The county seat, Bryson City, has two live webcams to view the city happenings from.

Clay

11,140

17.4% of county
residents (1,845 people)

51

377 is the total population of the town of Hayesville, the county seat.

Macon

35,411

18.8% of county
residents (8,183 people)

49

Home to various waterfalls (Cullasaja Falls, Dry Falls, Bridal Veil Falls, Quarry Falls).

Jackson

42,221

20.9% of county
residents (7,879 people)

37

Richland Balsam is the county’s tallest peak (6,410 ft.) as well as the highest point along the entire Blue Ridge Parkway (6,053 feet).

Transylvania

34,369

15.4% of county
residents (4,983 people)

51

Is the wettest county in NC, receiving over 90 inches of rain annually.
Sources: The Budget & Tax Center’s County Economic Snapshots (released April 2017), NC OSBM County Estimates.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center, Trump Administration

Why does the President tweet about stock market levels but not our poverty rate?

Since July 1, President Trump has tweeted to celebrate the results of the U.S. stock market nine times and has tweeted about strong jobs numbers thirteen times. His frequent tweeting about these two metrics appears to indicate that they are his key indicators for assessing how we are doing as a country. It is worth noting, however, that during this timeframe not once has he tweeted about the “poverty rate” in the U.S. Why not?

Yes, the U.S. stock market, as measured by the Dow Jones Industrial Average, seems to be doing well as the Dow posted record closing highs all of last week. This, however, should not be too surprising. Since 2013, the U.S. stock market has hit a new high closing record 157 times (123 times under President Obama, 34 times under President Trump). Here’s another way of looking at it: The U.S. stock market has hit an all-time high in 30 of the last 54 months. In other words, the U.S. stock market has been doing well for quite some time now, meaning the record-breaking numbers that the President is tweeting about aren’t quite as rare as they might seem.

What should be surprising and alarming is the fact that the President does not seem to view the U.S. poverty rate as a key indicator of how America is doing.

In a recent article Politico points out that economists have frequently found little relationship between returns on stock investments and real economic growth. Instead, it appears that a strong stock market helps the rich get richer while the poor get poorer, through the increasing income inequality gap. The article points out, “about 80 percent of the value of the stock market is held by the richest 10 percent of the nation; the vast majority of gains in share value accrue to the rich, not to most Americans.”

Understanding and tracking the poverty rate in the United States and in North Carolina is important because it is an indicator of whether the economy is delivering opportunity for all. It goes without saying that the greatest country in the world, and the one with strongest economy, should not have a high number of people that are poor.

Unfortunately, Read more

NC Budget and Tax Center, Trump Administration

Essential nonpartisan Congressional Budget Office is now at risk by proposed amendment

Nonpartisan federal government agencies that often go unnoticed but are vital for good government include the U.S Congressional Budget Office (CBO) and the Government Accountability Office (GAO). The CBO, for example, has provided Congress with budgetary and economic information in a variety of ways and at various points in the legislative process for over 40 years.

The concept of good government has always been vital to our democracy. Good government at its core promotes principles such as accountability, openness, integrity, transparency, and reliability. When good government, including agencies such as the CBO and GAO, is supported, the nation and its entire people thrive.

Unfortunately, in Congress, House lawmakers have now introduced an amendment to eliminate CBO’s entire Budget Analysis division (cutting 89 positions) and cut CBO’s budget by $15 million.

Just for reference, CBO currently has a staff of about 235 people. In other words, the proposed amendment would cut CBO’s staff by 38 percent. And from a budget standpoint, the amendment means CBO would lose a third (33 percent) of its funding next year.

A cut of this magnitude would severely damage effective and long-standing good government processes that have helped the U.S. for decades, as professional staff would no longer be able to analyze federal spending or provide formal cost estimates for nearly every bill approved by Congressional committees.

Rep. Mark Meadows

North Carolina’s U.S. House Representative, Mark Meadows (R-District 11), who supports this amendment to cut CBO has stated he would use a rule called the Holman Rule, which allows Congress to cut salaries for individual federal workers, for the first time since 1983. The concern here is that if the House succeeds in doing this to CBO, they could replicate this type of cut at other agencies. [Note: The Holman Rule which was removed in 1983 was reinstated by House Republicans earlier this year.]

All of this is ironic and unfortunate considering that just last Friday every former CBO director signed a letter to congressional leadership that stated: “We write to express our strong objection to recent attacks on the integrity and professionalism of the agency and on the agency’s role in the legislative process.”

No matter which political party one belongs to, it is important to know that these types of devastating budget and staffing cuts to a government agency that is grounded on upholding good government principles are wrong. The CBO has consistently proven that it takes a number of steps to ensure that all of its work is objective, impartial, and nonpartisan—the importance of which was emphasized by CBO’s founding director, Alice Rivlin, in a 1-page memo to CBO staff in 1976 and is posted on CBO’s website.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

CBO Memo to Staff (1976) by LT on Scribd

NC Budget and Tax Center, public health

NC’s and the nation’s uninsured rate has fallen to a historic low under ACA, but you’d never know that listening to Senate leaders

Here’s some important and quick facts that all Americans and North Carolinians should know this week, when the Senate will formally vote in an attempt to repeal the Affordable Care Act:

The United States has made significant progress over the past seven years when it comes to reducing the number of people that are uninsured, according to data from the Centers for Disease Control and Prevention (CDC). In 2016, only 9 percent of America’s population was uninsured, compared to 18.2 percent in 2010. That’s the lowest share since the CDC began tracking this statistic 45 years ago! If you prefer numbers: 28 million people were uninsured last year, compared to over 48 million in 2010. In NC, only 11.4 percent of all North Carolinians were uninsured last year, compared to 21.3 percent in 2010. Take a moment to think about that.

“There has never been a decline this large and over such a short period of time.” –Rachel Garfield, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured.

The last time the percentage of uninsured in our country was close to the historic low of 9 percent we saw in 2016 was 39 years ago, in 1978. Here are a few things that happened back in 1978 (when the percentage of persons under 65 without health insurance was 12 percent):

    • President Jimmy Carter signed H.R. 1337 into law, which allowed home-brewing of beer in the United States (sparking the craft beer revolution).
    • U.S. Senate proceedings were broadcasted on radio for the first time.
    • Grease, starring John Travolta and Olivia Newton-John, was released.
    • Woody Allen’s Annie Hall won Best Picture.
    • The rainbow flag of the LGBT movement flew for the first time at the San Francisco Gay Freedom Day Parade.
    • Pope John Paul II became the 264th pope.
    • Mavis Hutchinson, a 53-year-old grandmother, became the first woman to run across the U.S.
    • The Dallas Cowboys defeated the Denver Broncos in Super Bowl XII.
    • Pete Rose, the all-time MLB leader in hits, gets his 3,000th major league hit.

Below you can see the official U.S long-term trends in health insurance coverage since 1968:

CDC_US Healthinsurance1968-2015 by LT on Scribd

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.