NC Budget and Tax Center

North Carolina’s budget and policy choices can improve health

Deeper and smarter investments in education, infrastructure, economic security, housing, and other areas can eliminate barriers to good health for low-income residents and communities of color, according to a new report from the Center on Budget and Policy Priorities (CBPP).

In addition to these and other public investments, North Carolina can remove obstacles to better health by:

  • Improving access to affordable health care, including by expanding Medicaid under the Affordable Care Act (ACA);
  • Leveraging Medicaid to improve access to other economic and social programs known to improve health, like case management and supportive housing;
  • Enacting social and economic policies known to improve health, like creating and expanding paid leave programs and raising minimum wages; and
  • Improving state and local tax systems by basing them on a taxpayer’s ability to pay and ensuring they raise enough revenue to maintain the quality of the places in which residents live, work, learn, and play.

Social, economic, environmental, and behavioral factors account for 80 percent of an individual’s health; health care access and quality are responsible for just 20 percent.

Opportunities to be healthy are not available to all North Carolinians. Where there is greater income and wealth inequality, there are also greater disparities in health. Income and wealth inequality and a history of structural racism have erected barriers to health for low-income residents as well as communities of color:

  • Black North Carolinians die more than three years earlier than white residents, on average.
  • Black babies born in North Carolina are nearly twice as likely as white babies to be born with low birthweight.
  • Black babies are also more than twice as likely as white babies to die before their first birthdays.

Generating revenue that will allow for investments in programs that help to ameliorate these deep disparities has been more difficult in North Carolina, due to changes to the state’s tax code starting in 2013. Findings from the CBPP report support the need for increased investments, including those strategies described above, in order to equip all North Carolinians with opportunities to be healthy.

Suzy Khachaturyan is a Fiscal Analyst with the Budget & Tax Center. 

NC Budget and Tax Center

The reality of North Carolina’s labor market and what it means for health insurance

Last week’s Prosperity Watch highlighted the strong relationship between income and health insurance—that is, the higher one’s income the more likely they are to be insured.  The problem with this relationship, beyond the fact that everyone needs insurance — not just the rich — is that it reflects an underlying challenge in our labor market that complicates access to health care.

Three fundamental challenges with the state’s labor market are holding back North Carolinians from healthy opportunities.

  1. North Carolinians with low incomes are struggling to make ends meet in low wage jobs. According to data from the Working Poor Families Project, 75 percent of North Carolinians with incomes below 200 percent of the federal poverty level (or incomes less than $51,500 for a family of four) are working.  Moreover, 1 in 9 North Carolinians who worked full-time year-round were uninsured.
  2. North Carolinians with low incomes often have to work intermittently throughout the year or with irregular hours from week to week. Nationally, analysts have found that 1 in 4 Americans who work at least 1,000 hours in a year would be at risk of losing coverage because their work hours fluctuate enough in a given month that they would fall below reporting requirements established by some states to access health care.  These reporting requirement thresholds are arbitrary and inflexible in the face of a job landscape where inconsistent work scheduling and temporary work, for example, are on the rise.
  3. Too many North Carolinians are still struggling to find jobs in many communities that have not recovered from the Great Recession (and even in those that have). The most recent county data found that 45 counties still have fewer jobs than before the Great Recession. This lack of employment opportunity is particularly pronounced in rural areas but also affects urban neighborhoods that are disconnected from their broader regional labor market.

Without exploring the underlying ways in which our current labor market matters for leading healthier lives, it is impossible to design the best policies to make sure that people are connected to the health insurance they need. Even worse, it could lead to consideration of unfixable and flawed policies that suggest reporting on work activities to qualify for health insurance coverage can solve the underlying challenges in the labor market.

Indeed, to promote healthy opportunities for every North Carolinian, our policymakers must not only ensure health insurance coverage is accessible and affordable but address the issues that make work in the current labor market fall short of delivering the security of well-being.  Doing so will lead to not just healthier outcomes but also higher incomes.

NC Budget and Tax Center

A federal budget that reflects our values

Friday is the deadline for Congress and President Trump to put forward a long-term plan to fund the government and the essential services that the federal budget funds in communities across the country including here at home in North Carolina.  Now with a potential deal that would provide $1.375 billion in funding for border security measures, it appears that there could be a long-term funding agreement signed by the deadline.

Of course, this deadline and the entire saga that resulted in human and economic costs for North Carolina was avoidable.  The impacts of the first federal shutdown that ended on Jan. 24 affected federal employees, contractors, those North Carolinians engaged with federal programs and services, state agencies administering programs and services and visitors and businesses in our state.

But even more damaging is the lasting effect on the budget process and our democracy.  The funding of core government services, programs, and employment was held hostage to the demand for funding one specific priority of the President: the building of a wall on the country’s southern border.

With a compromise made that will spend $1.375 billion of taxpayer money on a symbol of exclusion with limited value to the integrity of our country’s immigration system, it is worth asking what precedent this sets for the process going forward and what priorities these dollars could have instead been committed to.

$1.375 billion could have:

  • Provided maximum Pell grant awards to 267,770 people across the country,
  • Ensured 499 million more meals each year were available to hungry families,
  • Connected 205,443 children and their families to the assistance needed to afford a quality early learning experience
  • Trained 311,791 workers for jobs of the future

Our federal budget, like our state budget, is about priorities and what we value.

In light of the recent raids that have occurred in our state in the past two weeks, North Carolinians are all too aware that ICE enforcement does not just occur at the border, and that it can hit where people feel the most safe and secure – in their homes, at their workplaces, and in front of their children’s schools.  The notion that a wall will serve as a cure-all for our immigration system or correct  years of missed opportunities for comprehensive immigration reform as a nation rings even more hollow now.

Indeed, the taxpayer dollars that are proposed to be spent on the wall could instead serve to strengthen our immigration system by doubling existing funding for immigration courts to reduce backlogs and increase efficiency in the process. Those dollars could provide universal legal representation to ensure every immigrant, regardless of income, has access to counsel. Alternatively, the funds could be utilized to fund the integration and support of children of immigrants already in the United States to ensure their economic and social mobility through early childhood programming and  affordable higher education.

As long as our elected leaders advance the notion that monuments to exclusion and displays of force should trump common-sense measures and sound investments that strengthen our communities, we should be clear that we are far from realizing our values as a nation.

NC Budget and Tax Center

Veteran academic to discuss NC’s racial wealth gap

The N.C. Budget and Tax Center will host its latest “Economy for All” event next Wednesday, February 20 in Durham. The event will feature Professor Sandy Darity, who is a professor of Economics, Public Policy, and African and African American Studies at Duke University. He will discuss the state of North Carolina’s racial wealth gap and what we can do to foster equity.

This is the official invitation from the Budget & Tax Center:

“Each year the Budget & Tax Center, a project of the North Carolina Justice Center, hosts a talk on economic issues in our state.  Under the banner of Economy for All, this event seeks to shape current debate about the role of public policy in advancing more equitable economic outcomes and informing the general public about the issues that we must address to fully realize our potential for greater well-being.

This year, we would like to invite you to join us to hear from Professor Sandy Darity about his extensive work on advancing an equitable economy in our country and the policy choices that can make that possible.”

Here are the event details:

Date: Wednesday, February 20, 2019

Time: Networking reception from 5:30p – 6:15p and discussion panel from 6:15p – 7:30p

Location: The Boiler Room (320 Blackwell St #101, Durham, NC 27701)

Click here to check out the event Facebook page and RSVP.

NC Budget and Tax Center

State ‘millionaires’ taxes’ can fund key investments without harming state economies

State income tax increases on high-income residents can raise substantial revenues for investments in people and communities and are more likely to boost long-term productivity than harm short-term economic growth, according to a new report from the Center on Budget and Policy Priorities (CBPP).

The facts about state millionaires’ taxes

  • States have increased their top income tax rates without harming their economies.
  • Over the last 18 years, 15 of the 20 major studies examining states’ income taxes found little to no effect on their economic growth.
  • Millionaire tax flight is uncommon and, therefore, does not weaken state economies. Less than three percent of millionaire households moved to new states in a given year.
  • High-income tax increases can help North Carolinians afford investments that decrease racial inequities, build economic opportunity, and spur growth, such as high-quality education, improved support for low-income families, and better roads and other infrastructure.

Millionaires in North Carolina have been benefiting from tax cuts since 2013. Before then, there was a graduated rate structure on personal income that taxed higher incomes at higher rates. In the first round of tax cuts in 2013, that was reduced to a flat tax rate of 5.75 percent. Since then, the tax rate has continued to be reduced and as of January 1, 2019, it stands at 5.25 percent.  Since 2013, 75 percent of the net tax cuts have flowed to the top 1 percent of income earners in North Carolina; the average annual income for those taxpayers during that time was nearly $1 million.

As of November 2018, there is now a cap of seven percent on income tax rates in the state constitution. Millionaires are the primary beneficiaries as they receive more than 50 percent of the total net tax cut from the inability to raise rates to prior levels on higher income.  A millionaires’ tax in North Carolina at the capped seven percent rate could raise revenue for meaningful investments that ensure our children are ready to learn and reading by 3rd grade, connect people to health care, and allow our workers to upgrade their skills for emerging industries.