Poverty and Policy Matters

NC Budget and Tax Center, Poverty and Policy Matters

In another sign of an economy that is failing to provide for working families, the share of female-headed working families considered low- income is increasing nationwide. There are now 4.1 million low-income families headed by working mothers in the United States, according to a new report by the Working Poor Families Project. The number of low-income working families that were headed by women jumped to 58 percent of the total in 2012, up from 54 percent in 2007. Figures are substantially higher for communities of color.

The low-income threshold for a family of three with two children was $36,966 (roughly twice the federal poverty line), according to the authors of the report.

The picture isn’t any rosier in North Carolina, which ranks 19th in the nation for the number of female-headed, low-income families. Of the 380,113 low-income working families in the state, 40 percent—or roughly 151,000—were headed by working mothers. Working hard simply isn’t enough for these families to make ends meet. Yet, we know that our economy grows best when the gains are broadly shared across the income distribution. Read More

NC Budget and Tax Center, Poverty and Policy Matters

North Carolina has the 10th highest poverty rate in the nation—down from 13th last year—with more than 1 in 4 of its children living below the federal poverty line. Our state also faces widespread income inequality and less economic mobility than the nation and the southeastern region. Rather than pursue a mix of tax and budget policies that boosts economic security for middle-class and low-income families, state lawmakers instead enacted a tax plan that shifts taxes away from the wealthy and towards the bottom 80 percent of taxpayers, on average.

The tax plan drains $525 million in available revenue for public investments over the next two years—a figure that balloons to at least $650 million within five years.

Consider what could have been done to help improve a child’s shot at the American Dream if state lawmakers didn’t choose to cut taxes for the wealthy and profitable corporations. Over the next two years, these dollars could have been used to provide a package of poverty-busting and mobility-lifting investments such as:

  • Eliminating the waiting list for the North Caroline pre-Kindergarten program;
  • Keeping and strengthening the state Earned Income Tax Credit, which helps boost the income of families who work in low-wage jobs;
  • Maintaining the income tax deduction for contributions to North Carolina’s 529 college savings plans (which was eliminated in the tax plan); and
  • Maintaining funding for the 10 nonprofits that promote economic development in economically lagging and distressed communities across the state – these entities include the Institute of Minority Economic Development and its Women’s Business Center

Despite lawmakers’ assertions, academic research simply lacks consensus on whether cutting taxes is an effective strategy for boosting the state’s economy and creating more jobs.  However, an established and growing body of research exists that show the value of public investments, which serve as the building blocks of a strong economy and family economic security. Read More

NC Budget and Tax Center, Poverty and Policy Matters

There are many wildly misleading claims about poverty in America. Unfortunately, many of these myths are taken as truth despite plenty of evidence to the contrary. And yes, self-identified think-tanks peddle these myths far too often. As we mark the 50th Anniversary of President Johnson’s launch of the War on Poverty, here are the top 5 myths that should be put to rest in 2014:

1.      The War on Poverty Failed

Many pundits often assert that poverty-reduction efforts have failed and likely point to the official poverty level to support their claims. But, when you examine a more accurate measure of poverty the evidence is clear that the War on Poverty launched during the Johnson era and those implemented thereafter—such as the Earned Income Tax Credit—have helped make substantial progress against poverty. Still, without question, much more needs to be done to help further reduce poverty and hardship and promote economic opportunity.

2.      “Welfare” Pays Better than Work

Folks insisting that it pays better to be jobless have yet to produce findings that stand up to serious scrutiny. Read More

Falling Behind in NC, NC Budget and Tax Center, Poverty and Policy Matters, The State of Working North Carolina

Today is EITC Awareness Day – also referred to as the Earned Income Tax Credit (EITC). The EITC is a federal tax credit that encourages work by boosting the income of low- and moderate- income working people and offsets federal payroll and income taxes. The EITC has proven to be a powerful tool in helping lift families out of poverty and improving the well-being of young children.

In 2007, a state EITC was established to help further boost the wages of low- and moderate-income workers in North Carolina and offset the higher share of state and local taxes they pay as a percent of their income compared to high-income workers. More than 900,000 North Carolinians claimed this tax credit in 2011, according to the most current tax information provided by the NC Department of Revenue. The impact of the EITC spans across the state, with taxpayers in each of the state’s 100 counties claiming the tax credit (see this interactive map).

Unfortunately, this tax filing season will mark the last year that low- and moderate-income North Carolina workers will benefit from the state EITC. State leaders allowed the state EITC to expire at the end of last year and chose not to extend the tax credit as part of the tax plan passed last year. As a result, the expiration of the state EITC represents a tax increase for more than 900,000 hardworking low- and moderate-income North Carolina taxpayers, for which every dollar counts in their efforts to make ends meet.

NC Budget and Tax Center, Poverty and Policy Matters

Gene Nichol—Boyd Tinsley Distinguished Professor and Director of the Center on Poverty, Work and Opportunity at the UNC School of Law—wrote a year-long series in the News and Observer last year that highlighted poverty’s persistent and varying grip on North Carolinians. The timing could not have been more perfect. A group of state lawmakers were intent on dismantling the state’s public structures even though the economy was failing to deliver for far too many of our family members, friends, neighbors, and fellow North Carolinians.

Mr. Nichol cites some startling figures that I’ve shared in this space before, such as the troubling trend of poverty among children of color that is edging closer and closer to half of the population. But Nichol did what I couldn’t do: he tapped into the hearts and minds of his readers by eloquently moving beyond the bloodless statistics. He brought to light the disturbing and stark reality of how the iconic images of the faces of poverty 50 years ago when the War on Poverty was launched are not all that different from the working poor of today.

To the disbelief of many, he documented the experiences of those living in extreme poverty out in the eastern part of our state—experiences that are so meager that some live in shacks with no in-door plumbing. Read More