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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.

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Minimum wage 2(Cross-posted from Off the Charts - the blog of the Center on Budget and Policy Priorities.)

Raising the minimum wage would help the economy, CBPP Senior Fellow Jared Bernstein writes in the latest edition of the CQ Researcher.

Two well-established facts help back up this argument, Bernstein says:

The first fact is that the American economy is made up of 70 percent consumer spending.

Economists widely agree that an extra dollar earned by a wealthy person is less likely to be spent than an extra dollar earned by a low-income person….

The second fact Read More

NC Budget and Tax Center, Poverty and Policy Matters

 “This administration today, here and now, declares unconditional war on poverty in America. … It will not be a short or easy struggle, no single weapon or strategy will suffice, but we shall not rest until that war is won. The richest nation on earth can afford to win it. We cannot afford to lose it.”

President Lyndon B. Johnson, January 8, 1964

Today marks the 50th anniversary of President Lyndon B. Johnson’s declaration to an unconditional War on Poverty, an effort that was announced during his 1964 State of the Union address. Far too many North Carolinians and Americans still live on the “outskirts of hope” and face the stark realities of poverty. With that said, poverty has fallen significantly over the last half-century (when using a comprehensive measure), illustrating the key role that public policies play in combating poverty and boosting economic security.

Johnson’s War on Poverty laid the foundation for the modern-day safety net, including Medicare, Medicaid, Head Start, SNAP (formerly  known as food stamps), and a boost to Social Security benefits. Policymakers also provided funding towards elementary and secondary education, established the college work-study program, and provided loans for low- and moderate-income students.

The modern-day safety net cuts poverty nearly in half (see chart below) and reduces the depth of poverty among many families living moderately above the poverty line. Read More

NC Budget and Tax Center

This year marks the 50th anniversary of the start of the War on Poverty and Wednesday, January 8th in particular marks the 50th anniversary of LBJ’s speech in which America’s War on Poverty was declared. National media and political figures have been weighing in on whether the War on Poverty has worked, is a “Mixed Bag”, or has missed the mark. The Budget and Tax Center will be launching a blog series this month which will look in depth into the lasting effects of the War on Poverty, its successes, and the challenges that still lie ahead. We’ll also be doing some must-read myth busting as it relates to income and poverty.

What we do know is that the poverty rate has declined since the War on Poverty was declared, and it has declined even more significantly when supplements such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and the Earned Income Tax Credit (EITC) are factored in. What we also know is that even as productivity of workers has increased, wages have stagnated for middle and low income families and inequality has continued to rise.

The War on Poverty and associated safety net programs, which have been a lifeline for millions of families, have done their job to the extent that we have let them. Going forward it is imperative to make adequate and real investments in the programs that we know work in lifting families out of poverty such as the EITC and SNAP, but also to tackle the broader issue of wage stagnation and inequality by ensuring, among other strategies, that we have a minimum wage that reflects the cost of living in the 21st century, and by taking a long hard look at the racial and class inequity that still plagues our nation and our state.

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Food bankBefore you sit down to open presents or enjoy a holiday feast tomorrow or at some other point over the coming days, take a moment or two to read Sarah Ovaska’s Christmas Eve story over on the main Policy Watch site — it’s called “Hungry, with no end in sight.”

After you’ve done that, take a few more minutes to contemplate what it would be like to rely like Sylvia Cameron on a paltry sum in SNAP benefits (i.e. Food Stamps) and the charity of others just to survive and stay nourished each month.

Next, briefly ruminate on the fact that a shocking percentage of your neighbors are in just such a boat — the vast majority of them good, honest, working people (and a huge percentage children).

Finally, if you make it this far, take at least a moment to consider the fact that this situation — one that does not exist in many other modern nations — might just not be the fault of those who are hungry and, in fact, might be, at least in some small measure, all of our responsibility.

You can read Sarah’s article by clicking here.