NC Budget and Tax Center

Landmark bill would strengthen early childhood education in N.C.

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12 days ago
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Earlier this year, the Budget & Tax Center released a report analyzing the role that public investments in North Carolina’s early childhood workforce could play in supporting our state’s goals of delivering high quality learning experiences to our youngest children. As the 2019-20 legislative session presses on, the early childhood education workforce and its advocates are hopeful that they may see historic legislation passed this session.

Last Friday, the North Carolina House passed House Bill 882, a landmark bill that would strengthen the quality of early childhood education in North Carolina and help ensure early childhood educators can meet their needs and provide quality care.  The bill would make progress toward these goals by focusing on:

  • High Quality Learning – The bill establishes increased educational and professional standards that support high quality learning for students. More specifically, the bill requires lead teachers who are hired as of Jan. 1, 2020, to have the infant Toddler or Preschool Certificate or equivalent by July 1, 2021. Additionally, the Division of Child Development and Early Education (DCDEE) is required to develop expected professional standards and core competencies for lead teachers and create a process for teachers to demonstrate they have achieved these standards.
  • Compensation for Early Childhood Educators – In recognition that infant and toddler educators in North Carolina experience the lowest wages and minimal education requirements, the bill requires DCDEE within the Department of Human Health Services (DHHS) to develop a program that will create incentives for higher teacher education and compensation by providing subsidy incentives for child care programs to employ and pay teachers who have an associate degree or higher by July 1, 2020.
  • Targeted Program for NC’s Youngest Children —DHHS/DCDEE is also required to conduct a Feasibility and Cost Study to create a special Infant and Toddler child care program. The implementation of these programs creates incentives for careers and early education and may help lay the ground work for compensation to be placed within Quality Rating and Improvement System (QRIS) standards.
  • Data and Accountability— State level assessment and monitoring of the early childhood workforce is established through the bill’s requirement for a report on the status of the early childhood workforce every three years.

The Senate now has the to make certain that every infant is safe and developing, every toddler is thriving, and every preschooler is prepared for kindergarten.

 

 

NC Budget and Tax Center

Millionaire’s tax could raise revenue, spur growth, and advance race equity

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April 17, 2019
In NC Budget and Tax Center

Tax week represents a good time to reflect on how North Carolina’s current tax code places limitations on revenue building opportunities for much needed public investments. If North Carolina seeks to fulfill its commitments and ensure prosperity for all of its residents, then it must take advantage of sound policies — like placing high rates on higher incomes through a a millionaire’s tax — that can raise such revenue. Roughly $362 million could be raised from a millionaire’s tax in North Carolina.

Researchers have proposed higher tax rates on higher incomes based on the idea that $1 for a very wealthy person doesn’t make a significant impact on their well-being in the same way that it would for someone with a much lower income. Furthermore, given the high concentration of wealth that exists in the hands of a few — which is overwhelmingly white — placing a higher rate on the highest incomes suggests that it would (1) only impact a small number of taxpayers and (2) begin to address the growing racial wealth gap.

In North Carolina, a higher tax rate on income over $1 million would reduce the size of the average net tax cut for the top 1 percent by 0.5 percent, or $6,461. This would, in part, address the upside-down nature of the tax code while making it less likely that the tax load will continue to shift to low- and middle-income taxpayers as growing needs must be met. Future policymakers would not be inclined to just raise the flat rate on all income but could continue to build a graduated rate structure on higher income.

While our state seeks to provide each of us with a high quality of life, it’s already struggling to keep up with investments needed in the classroom, in the infrastructure that ensures our communities are resilient and connected to opportunity, and in the protections and supports that promote healthy living environments. A millionaire’s tax — and moving to a graduated income tax structure that sets higher rates on higher income — can help North Carolina raise revenue for its priorities, decrease racial inequities, build economic opportunity, spur growth, and address, in part, it’s upside down tax code.

NC Budget and Tax Center

Report: Ocasio-Cortez is right; a marginal tax rate on high incomes would be good policy for NC

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March 20, 2019
In NC Budget and Tax Center

In January, Representative Alexandria Ocasio-Cortez (D-NY) proposed the idea of raising marginal income tax rates — the tax imposed on each additional dollar of income after a pre-determined cut-off — on high incomes ($10 million+) as a means of raising revenue for key investments and addressing growing income inequality. Since then, a number of members of Congress have put forward ideas about how to tax higher incomes at higher rates.

According to a recent poll, the majority of Americans agree with Representative Ocasio-Cortez’s proposal.

State policymakers across the country have also put forward proposals to make higher incomes subject to higher tax rates.  The Center on Budget & Policy Priorities has catalogued these efforts here. As one example, in his 2019 budget, New Jersey Governor Phil Murphy proposed implementing a 10.75 percent rate on gross incomes over $1 million, in addition to other tax increases, to help raise revenue for New Jersey’s priorities.

Here in North Carolina, the General Assembly has the ability to place a higher rate — up to 7 percent — on incomes over $1 million and provide the dollars needed to meet community priorities.

Earlier today, we released an analysis of what this would mean for North Carolina. A graduated tax structure that taxes higher incomes at higher rates — particularly one that places a top marginal rate of 7 percent on income over $1 million — could raise roughly $362 million in revenue for priorities in communities across our state and address, in part, the state’s upside-down tax code.

If North Carolina seeks to fulfill its commitments and ensure prosperity for all of its residents, then it must take advantage of sound policies that create opportunities to raise revenue. As research shows, such policies have been enacted elsewhere without negative effects on the economy.

Marginal income tax rates on high incomes can help North Carolinians afford investments that decrease racial inequities, build economic opportunity, and spur growth, such as high-quality education, improved support for low-income families, and better roads and other infrastructure improvements.

Commentary, Education

Report: Low wages vexing early childhood education in North Carolina

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February 15, 2019
In Commentary, Education

Earlier this week, the N.C. Justice Center’s Budget & Tax Center released a report analyzing the role that public investments in North Carolina’s early childhood workforce could play in supporting our state’s goals of delivering high-quality learning experiences to our youngest children.

The report highlights the realities low-wage work presents for early childhood educators and students, and promotes a two-generation approach to address these grim realities.

According to the report, North Carolina’s childcare system faces two major barriers:

(1) Parents simply cannot afford to pay rising child care costs with stagnant and low wages.

(2) Early childhood educators can’t make ends meet and deliver a quality learning environment for each child on their low wages.

North Carolina has made commitments towards providing high quality early childhood programs. However, the state continues to fall short in ensuring early childhood educators can provide for themselves and their families while also providing high-quality care to the state’s children.

If the benefits of North Carolina’s early childhood system are to be fully realized, these educators’ wages must match the importance and long-term impacts of their work. Only then can they cover the costs of their every-day needs, including child care, and put their energy and time toward the education of their students.

One place to begin investing in early childhood students and their educators is existing compensation and professional development programs such as the Infant Toddler Educator AWARD$ program, the Child Care WAGE$ program, and the Teacher Education and Compensation Helps (T.E.A.C.H.) program. If brought to scale statewide, these tools can be designed to ensure early childhood educators’ compensation aligns with their credentials and with that of others in the education profession.

North Carolina has a robust infrastructure in place to support the early childhood workforce and strengthen the quality of early childhood programs. A focus on adequately and equitably funding that infrastructure will ensure that each child is able to thrive and that the workers — often parents themselves — can as well.

Martine Aurelien is a policy fellow at the N.C. Justice Center’s Budget & Tax Center.

NC Budget and Tax Center

State ‘millionaires’ taxes’ can fund key investments without harming state economies

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February 7, 2019
In NC Budget and Tax Center

State income tax increases on high-income residents can raise substantial revenues for investments in people and communities and are more likely to boost long-term productivity than harm short-term economic growth, according to a new report from the Center on Budget and Policy Priorities (CBPP).

The facts about state millionaires’ taxes

  • States have increased their top income tax rates without harming their economies.
  • Over the last 18 years, 15 of the 20 major studies examining states’ income taxes found little to no effect on their economic growth.
  • Millionaire tax flight is uncommon and, therefore, does not weaken state economies. Less than three percent of millionaire households moved to new states in a given year.
  • High-income tax increases can help North Carolinians afford investments that decrease racial inequities, build economic opportunity, and spur growth, such as high-quality education, improved support for low-income families, and better roads and other infrastructure.

Millionaires in North Carolina have been benefiting from tax cuts since 2013. Before then, there was a graduated rate structure on personal income that taxed higher incomes at higher rates. In the first round of tax cuts in 2013, that was reduced to a flat tax rate of 5.75 percent. Since then, the tax rate has continued to be reduced and as of January 1, 2019, it stands at 5.25 percent.  Since 2013, 75 percent of the net tax cuts have flowed to the top 1 percent of income earners in North Carolina; the average annual income for those taxpayers during that time was nearly $1 million.

As of November 2018, there is now a cap of seven percent on income tax rates in the state constitution. Millionaires are the primary beneficiaries as they receive more than 50 percent of the total net tax cut from the inability to raise rates to prior levels on higher income.  A millionaires’ tax in North Carolina at the capped seven percent rate could raise revenue for meaningful investments that ensure our children are ready to learn and reading by 3rd grade, connect people to health care, and allow our workers to upgrade their skills for emerging industries.

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