NC Budget and Tax Center

Federal tax changes benefit the wealthy, reduce funding for NC communities

Last week, with the release of the tax changes planned by President Trump and leaders of the US Congress, North Carolina taxpayers braced themselves for another layer of experimentation that is sure to fail our communities and our economy.

New data released today by the Institute on Taxation and Economic Policy confirms that the tax changes will primarily benefit the country’s wealthiest taxpayers, fail to target the middle class and reduce the ability to fund core public services in all 50 states.

In North Carolina, 57.6 percent of the net tax cut goes to the top 1 percent of taxpayers in the state.  While better than the national figure of 67.4 percent, it is a staggering figure signaling the failure to achieve the middle-class tax cut promised.

Here are three additional points that are important in reviewing the proposed changes at the federal level: Read more

NC Budget and Tax Center

256,000 N.C. children are at risk of losing healthcare coverage as Congress lets federal funding for CHIP expire

Federal funding for the Children’s Health Insurance Program (CHIP), which covers about 9 million children in the U.S., has now expired because Congressional leaders did not renew its funding by Sept. 30 as required by law. The CHIP program was enacted in 1997 and provides affordable, high-quality, and consistent health care coverage for children who do not qualify for Medicaid and whose families lack access to affordable employer-based or private insurance.

Congress’ failure to renew funding for the CHIP program means over 256,000 children across North Carolina are at risk of losing their only source of health care coverage. Furthermore, this decision by Congress also spells budget trouble for our state in 2018, as our General Assembly assumed continued federal funding for CHIP in the most recent state budget and failed to take seriously proposed federal budget cuts.

North Carolina is now projected to exhaust all of its federal funds for CHIP within the first three months of 2018. In other words, our state could be one of many states facing a funding shortfall in this area if Congress does not extend federal funding.

The Kaiser Family Foundation summarizes the negative impact to families and provides a North Carolina case study from the past that shows the real world implications:

“Reductions in CHIP coverage will result in coverage losses for children and negative effects on children’s health and family finances. If states close enrollment and/or discontinue coverage for children in separate CHIP programs, some children could shift to parents’ employer-sponsored plans or Marketplace plans, but others would become uninsured. Previously, some states closed enrollment in CHIP for limited periods in response to state budget pressures, and studies show that this led to coverage losses, left eligible individuals without access to coverage, and had negative effects on health and family finances.

“In North Carolina, enrollment fell by nearly 30% from about 72,000 to 51,300 when it froze enrollment between January and October 2001. The number of children determined eligible for CHIP but placed on a waiting list grew to over 34,000. Most (60%) children added to the waiting list were previously enrolled in Medicaid and were unable to transition to CHIP.

“Enrollment freezes negatively affected children’s health and family finances. In North Carolina, parents with children affected by the enrollment freeze said their children experienced periods of being uninsured and that almost all needed care during the time that they lacked coverage. Parents often had to delay care while their children were uninsured and reported difficulties obtaining prescription medications for their children. Parents also reported that obtaining care while their children were uninsured resulted in significant financial hardships, requiring them to cut back on necessities, borrow money from family or friends, and accrue debt for missed payments on bills.”

The fact that Congress failed to act in a timely manner for such an important program affecting millions of children is unfortunate considering that a recent poll had found three-fourths (75 percent) of the general public saying it was important for Congress to work on reauthorizing funding for the State Children’s Health Insurance Program (CHIP).

The bottom line: It is critical that Congress renew federal funding for CHIP and stop political budget games that hurt vulnerable families and children across America and North Carolina.

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

$1.5 trillion revenue-losing tax cut is windfall for wealthy, leaves out everyone else

After many months of waiting, President Trump and congressional leaders have finally released their tax framework – and, while many details are still missing, enough has been outlined that shows the plan is full of budget gimmicks and major benefits to the wealthiest households.

First, this tax plan is not fiscally responsible, as it would dramatically increase U.S. debt through its $1.5 trillion revenue-losing tax cut. Including interest costs, the plan is projected to cost $2.7 trillion and increase debt to 101 percent of Gross Domestic Product (GDP) by 2027, exceeding the size of the economy. “These numbers are all well above the 91 percent of GDP debt that is expected under current law by 2027,” according to the Committee for a Responsible Federal Budget.

As if that were not enough, this tax plan is not really meant to help “ordinary Americans.” The released framework will give massive tax cuts to the wealthiest households, as roughly half of the plan’s tax cuts would go to the top 1 percent of households, with an average annual tax cut per household of roughly $150,000.

In case you’re wondering how this is possible, it’s because the tax changes include: Read more

NC Budget and Tax Center

Failed tax-cut experiment hurts NC – don’t let it hurt the country

Senator Thom Tillis is trying to sell national leaders and elites on North Carolina’s failed tax cut experiments.  His commentary in the Wall Street Journal this week cherry picks data and ignores the growing evidence that many communities and taxpayers in our state have been hurt by the approach to tax cuts that have primarily benefited the wealthy.

Most egregiously, it shows that Senator Tillis has not taken the time to monitor the way in which the choices made in 2013 have played out in his home state over the past four years.

We have.  Here is what our analysis tells us. Read more

NC Budget and Tax Center

Proper planning needed: Within two years there will be more people ‘over 60’ in N.C. than ‘under 17’

The aging of our societies is one of the greatest success stories of the last one hundred years. However, with that success also come new long-term challenges and opportunities. Today, North Carolina is facing an extraordinary demographic makeover in the age of our population. The latest Prosperity Watch analysis from the NC Budget and Tax Center puts it like this:

“In less than two years, in 2019, our state will have a population with more people aged over 60 than under 17. Furthermore, between now and 2027, the proportion of the population aged 60 and over will only continue to grow – rising from 2.2 million to 2.8 million people, an increase of 28 percent.

Ten years ago, in 2007, a total of 31 counties in the state had more people aged over 60 than under 17. Since then, that number has more than doubled, and 78 counties now fit that description. However, what is most surprising is that this trend is not reversing anytime soon – by 2027, a total of 92 counties in North Carolina will have more people over 60 than under 17.”

That the state’s population is aging at this rapid pace requires policymakers and businesses across the state to plan and prepare while we still have the window of opportunity in front of us. If prudent planning in this area is accomplished we can minimize profound negative impacts on our economy and state budget in the coming years.

Policymakers must remember that government can have a constructive role in raising awareness about the implications of an aging society and engaging all sectors in preparing for the associated changes. As North Carolina continues to age here are three basic goals that should be accomplished in order for our state to thrive and be competitive in the coming years:

  • First, we must enable older adults to remain independent and age in the place of their choice with appropriate services and supports that enable a healthy lifestyle. Protecting the safety and rights of older and vulnerable adults, and preventing their abuse, neglect and exploitation is vital.
  • Second, we must ensure adequate investments today in the education of our children and their teachers in order to ensure the state’s workforce of tomorrow is prepared to lead in a complex and global economy.
  • Third, we must realize that migration into our state will be needed in order for us to maintain a strong workforce that will help sustain the state’s economy in the coming years.

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