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Advocates of a state tax overhaul are doing their level best to distract attention from the central truth that the plan would raise taxes on North Carolinians earning less than $51,000 a year and hand a significant tax cut to the top 20 percent.

The authors of a Civitas Institute report—which advocates abolishing the state personal income tax and replacing most of the lost revenue with a higher sales tax on a wider variety of goods and services—acknowledge that low- and middle-income households would pay more since they spend more of their income on products subject to sales taxes than wealthier households do. But they claim that this concern is overblown. They use several arguments to justify the tax shift, none of which stand up to scrutiny.

One of their central assertions is that some low-income people get government benefits, which apparently means that people living in poverty can afford to pay for a tax cut for the rich. We doubt most people in North Carolina agree. The proponents of a higher sales tax greatly exaggerate the government benefits most poor people in North Carolina actually receive. To bolster their case, they cite services available to families in Pennsylvania and appear to assume that every household eligible gets all of the services. But this is simply not the case in North Carolina. The vast majority of poor people do not receive all the services they are eligible for, in part because there are not enough funds to allow that. Read More

change in povertyA new Working Poor Families Project report finds for a fifth consecutive year the number of low-income working families has risen in the U.S., with nearly a third of all working families unable to earn enough to meet their basic needs.

New data show that 10.4 million U.S. working families were low-income in 2011, up from 10.2 million in 2010.

In North Carolina, 36% of the state’s working families were living below 200% of the federal poverty level in 2011 – struggling to cover housing costs, utilities, and child care.

The report notes that children growing up in low-income families have worse health and educational outcomes, and fewer opportunities for upward mobility.working poor

Nationwide, the total number of people that make-up low-income working families stands at 47.5 million. That is roughly equivalent to the total number of residents in California, Oregon, and Washington combined.

The report calls on federal and state policymakers to take actions that strengthen both job growth and job quality, and increase access to educational opportunities.

To read the full report, click here.

There’s new and sobering info from the Center on Budget and Policy Priorities and the Economic Policy Institute courtesy of the NC Justice Center that further highlights the folly of enacting new tax laws that shift the state’s tax burden more and more away from people at the top and toward the middle and the bottom:

MEDIA RELEASE: North Carolina Among States with Fastest-Growing Income Inequality
Poor and Middle-Income North Carolinians Fall Further Behind Top Earners
 
RALEIGH (November 15, 2012) — Income gaps widened in North Carolina between the late 1990s and the mid-2000s, as they did for the country as a whole, according to a new study by the Center on Budget and Policy Priorities and the Economic Policy Institute Read More

Worried you haven’t saved nearly enough money for retirement? You’re not alone. A new study by the Pew Research Center finds fewer Americans feel confident they have enough to last through retirement.

While Baby Boomers worried the most about their retirement nest eggs in 2009, this new study finds those in their late 30s most concerned about their retirement outlook.

So why are 30-somethings more worried? Here’s what researchers found:

In terms of wealth, adults ages 35 to 44 were hit disproportionately hard by the Great Recession. At the same time, this age group has disproportionately failed to benefit from the Great Rebound in stock prices that began after the recession ended three years ago. The reason is that a larger share of 35- to 44-year-olds got out of the stock market between 2001 and 2010 and were on the sidelines as stock prices began to increase in 2009, according to the Pew Research analysis of data from the Survey of Consumer Finances.

The S&P 500 Index peaked at 1,576 in October 2007 but then fell to a modern low of 667 in March 2009. Since then, the stock market began a steady rise, closing at 1,258 on the last day of December 2010. It now stands at about 1,450, nearly back to its earlier peak.

The magnitude of these fluctuations nearly matches the collapse of the market just a few years earlier when the S&P 500 hit its previous high of 1,553 in March 2000, only to lose half its value to finish at 769 in October 2002.

During this decade of wild market swings, ownership of stocks and retirement accounts, such as 401(k) and thrift accounts, fell among most age groups. But the declines were greatest among those ages 35 to 44. Read More