Archives

Falling Behind in NC, NC Budget and Tax Center

Lawmakers let the state Earned Income Tax Credit expire at the end of 2013, making North Carolina the first state in nearly 30 years to eliminate this proven anti-poverty tool. The state EITC helps promote shared economic prosperity for all North Carolinians. It goes only to working people with modest incomes, offering extra support to pay for basic necessities.

In a new video from the series “North Carolina: First in Flight from the EITC,” Heather Partridge talks about how the state EITC has helped her family. Heather lives with her husband and three daughters in Gibsonville, where she works at Hardee’s and earns $7.55 an hour – just barely above the state minimum wage of $7.25. In past years, the EITC has helped Heather pay for everyday goods for her children as well as pay off debt.  Read More

Falling Behind in NC, NC Budget and Tax Center

As North Carolina continues to recover from the Great Recession, most of the jobs that have been added pay low wages, making affording even basic necessities difficult for many hard-working North Carolinians. Raising the state minimum wage and reinstating a state Earned Income Tax Credit (EITC) are two policy tools that North Carolina state lawmakers can use to help boost wages, widen the path out of poverty, and reduce income inequality, a report released this week by the Center on Budget and Policy Priorities (CBPP) highlights.

Wages for the least paid workers are no higher than they were 40 years ago, the CBPP report highlights. Yet evidence shows that lifting the income of families earning low wages provides a range of benefits, including improved learning and educational attainment and higher future earnings in adulthood for low-income young children. Furthermore, raising the minimum wage and an enhanced state EITC together works to put families and individuals on a path to financial stability and self-sufficiency. Read More

Falling Behind in NC

If you work hard and play by the rules, you deserve a chance to get ahead. This is why the Earned Income Tax Credit was invented: to help families with low-paying jobs make ends meet.

Unfortunately, North Carolina is the first state in 30 years to eliminate its Earned Income Tax Credit. This move abandoned a bunch of our neighbors, people with stories like Kara’s:

YouTube Preview Image

There is no more stark illustration of why tax policy matters. With NC job growth coming primarily in low-wage industries, we’re going to need the Earned Income Tax Credit — and other measures that work for working people — more than ever.

 

Uncategorized

On the first day of a new fiscal year, it appears state Senators are in no rush to wrap-up budget negotiations with the NC House.

On Monday, the Senate rejected the House “mini-budget” that has the blessing of Governor Pat McCrory.  Senate President Pro Tem Phil Berger made it clear that without a more accurate assessment of Medicaid costs, his chamber was not prepared to make other budgetary decisions.

And with political observers now projecting the “short” session will last most of July, advocates are urging lawmakers to take time and reconsider restoring the state Earned Income Tax Credit.

The NC Budget and Tax Center calls the state EITC ‘a highly effective anti-poverty tool‘ with lasting, positive effects on children and low-income working families.

House Minority leader Rep. Larry D. Hall discussed the need to restore North Carolina’s EITC when he appeared last weekend on NC Policy Watch’s weekly radio show News & Views with Chris Fitzsimon. Click below to hear Rep. Hall’s remarks:

YouTube Preview Image Nearly one million families in the Tar Heel state —including 64,000 military families— benefited from the North Carolina EITC last year.

NC Budget and Tax Center

It comes as no surprise to working families that North Carolina’s tax system is fundamentally unfair. Families who make less than $47,000 a year pay, on average, nearly 2 times more of their income in state and local taxes than those making more than $345,000. But taxpayers don’t have to accept this fundamental unfairness. One of the best ways for our state to improve the fairness of its tax structure is through reinstating a refundable Earned Income Tax Credit.

A new report, Improving Tax Fairness with a State Earned Income Tax Credit, by the Institute on Taxation and Economic Policy shows just how effective a refundable Earned Income Tax credit (EITC) can be in counteracting North Carolina’s upside-down tax code.

Twenty-five states and the District of Columbia already have some version of a state EITC. Most state EITCs are based on some percentage of the federal EITC. The federal EITC was introduced in 1975 and provides targeted tax reductions to low-income workers to reward work and boost income. The federal EITC has targeted income limits to restrict eligibility and better support beneficiaries. By all accounts, the federal EITC has been wildly successful, increasing workforce participation and helping 6.5 million Americans escape poverty in 2012, including 3.3 million children.

In the same vein, states should look to the EITC to improve tax fairness.

North Carolina took that important step in 2007 by establishing an EITC at 3 percent of the federal credit which then subsequently increased to 5 percent. The average refundable state EITC is equal to 16 percent of the federal credit. When state lawmakers allowed our state EITC to expire after 2013, North Carolina had a refundable EITC at 4.5% of the federal credit, well below the average. In North Carolina, as in most states, it would take a fairly significant EITC to begin to offset the upside down nature of state tax codes.

As discussed in this report, lawmakers in Raleigh can take immediate steps to address the inherent unfairness in the tax code by reinstating a refundable state EITC. Ultimately, lawmakers should not only reinstate NC’s EITC but work to make it a higher percent of the federal credit. While it would cost revenue to reinstate North Carolina’s EITC, such revenue could be raised by repealing tax breaks that benefit wealthy taxpayers and corporations, which in turn would also improve the fairness of our state’s tax system.