NC Budget and Tax Center, Trump Administration

Trump budget goes after vulnerable children and families. Sad!

President Trump vowed to support working families by beefing up crucial supports like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). In an unsurprising twist, Trump has reneged on that promise and proposed slashing the EITC and CTC by $40 billion. Instead of supporting working families, he’s proposing raising taxes on the most vulnerable.

The 22 percent of North Carolina households who qualify for these income tax supports are working hard to raise their children and put food on the table. In stark contrast, the President’s budget proposes tax cuts for the country’s wealthiest taxpayers and estates.

Working family tax credits pay off in the short term by alleviating poverty. They also produce long term benefits. Low-income families receiving supports such as the EITC tend to have improved infant and maternal health, better school performance and college enrollment, and increased work and earnings in the next generation.

This budget proposal shifts a huge burden of responsibility onto state governments. Not the least of which will be renewed urgency for state leaders to establish a state Earned Income Tax Credit.  As I wrote about last week, we’ve just fallen behind South Carolina in this regard.

The White House has made it clear that it won’t prioritize working families. Instead, it’s making it harder for them to make ends meet, while the wealthy get another break. North Carolina families need their lawmakers to embrace their responsibility to us all. We need leaders who understand that building a strong economy means making sure all families can thrive, not just rich ones.

Marion Johnson is the Policy Advocate for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

South Carolina passes EITC, but we can do better

Last week South Carolina lawmakers established a state Earned Income Tax Credit (EITC), which makes them the 27th state to do so. The state EITC finally happened when legislators raised the state’s gas tax for the first time in nearly 30 years to raise some much-needed transportation revenue.

The drawback of gas taxes is that they’re generally regressive, meaning that they hit low-income taxpayers’ wallets hardest. So it’s crucial to find a way to balance raising infrastructure revenue with protecting working families.

That’s where the Earned Income Tax Credit (EITC) comes in. It can provide a targeted way to ensure that the tax code doesn’t ask more from low- and middle-income taxpayers.

A refundable EITC — one that allows working families to reduce their state income tax liability and deliver a refund — helps balance out the gas tax’s regressive nature.

South Carolina’s EITC will not be refundable, meaning taxpayers can only reduce their income tax liability to zero. Since most low-income South Carolina families pay little to no state income tax, this EITC won’t really help them. According to the Institute on Tax and Economic Policy (ITEP), “while the gas tax increase will significantly affect nearly all South Carolinians, a non-refundable EITC will only reach about 2 percent of those in the lowest 20 percent of incomes … and only about 11 percent of those in the next 20 percent.”

Refundable EITC would better reflect distribution of SC gas tax increase

This should sound familiar to those of us here in  North Carolina. Our legislators have cut income taxes at the top while eliminating many credits and deductions, and expanding the sales tax. While they claim that increasing the standard deduction helps low-income taxpayers, it’s actually about as unhelpful as a non-refundable credit. Since it reduces taxes for 70 percent of North Carolina taxpayers, it serves to benefit wealthier and middle-income taxpayers.

A state Earned Income Tax Credit is a critical step towards tax fairness and economic stability. The way South Carolina designed theirs is more of a stumble. The path is clear for the North Carolina House to once again lead in the Carolinas. We just need a better proposal for working and low-income families.

2018 Fiscal Year State Budget, NC Budget and Tax Center

What NC could do with the $3 billion our lawmakers gave to the wealthy

The North Carolina Senate’s budget contains very few surprises. Their proposal includes more corporate and personal income tax cuts, which follows the trend of the last several years. In fact, NC lawmakers have been so consistent about pursuing costly tax cuts that they’ve lost the state about $3 billion in revenue.

$3 billion is a lot of money, and it could buy a whole lot of things that would help our community more than tax cuts for the wealthy. Things like:

Eliminating child poverty

Half a million children in North Carolina are growing up in poverty. $3 billion would more than cover the $3,000 each child’s family would need to gain financial security.

Raising teacher pay to the national average

North Carolina now ranks 35th in the nation for average teacher pay, with an average salary of $49,837. This is an improvement over the last few years, but we’re still not close enough to our goal of reaching the national average. Doing that would take $1 billion.

Closing the racial poverty gap

Sixteen percent of the state lives below the poverty line, but the rates are much higher in communities of color.  It would take $1.2 billion to move 411,000 people of color in North Carolina out of poverty and close the racial poverty gap.

Providing pre-K for all eligible children

There are currently 40,000 children in North Carolina eligible for pre-k but not receiving services. Placing all of those children in pre-k would cost $191 million each year, and would provide them with long-term education and earnings benefits.
Here's what NC could do with the $3bn our lawmakers gave to the wealthy #wrongchoiceNC Click To Tweet—–

Our lawmakers could be building thriving communities and creating budgets that actually respond to our state’s needs. But since they’ve chosen to lose billions for the sake of tax cuts for the wealthy, now they literally can’t afford to make the right choices anymore.

NC Budget and Tax Center

Today is #EqualPayDay. Here’s what that means for women.

Today is #EqualPayDay. Women are the primary breadwinners for more than half a million North Carolina families, but thanks to a persistent wage gap, it’s generally harder for these families to make ends meet. Investing in good jobs in every community can go some way to closing the wage gap, but that won’t be enough. The wage gap will persist as long as we continue to ignore policy choices that specifically address it, and that will leave many North Carolinians and their families without full economic security.

Commentary, NC Budget and Tax Center, The State of Working North Carolina

Voters agree: Don’t call it a (Carolina) Comeback

We’ve been hearing a lot about a Carolina Comeback for the last few years, but it turns out that most of us haven’t been feeling it. A recent WRAL News poll finds that only a quarter of North Carolina voters think our state’s economy is stronger than it was four years ago. Additionally, “more than two-thirds of voters said their own economic well-being is either the same or worse than it was four years ago.”

Unfortunately, this isn’t a huge surprise. As the latest State of Working North Carolina report shows, bad policy choices have made overall economic growth, jobs, and changing industry opportunities fall far short of what we all need to thrive. This report, Don’t Call it a Comeback, explains the data that back up how North Carolina voters feel about their economic opportunities.

Hopefully lawmakers will take these poll results as a sign: they need to start prioritizing policy decisions that will create an economy that works for all.

Click here for the WRAL News poll.
Click here to see the NC Justice Center’s latest report, Don’t Call it a Comeback.