North Carolina Tax Credit for Working Poor
Recently a hint was dropped by Governor Easley that he'd like the Legislature to consider granting a tax credit for the working poor as an alternative to allowing the one-quarter percent sales tax to lapse. Republicans, like minority leader Sen. Phil Berger, immediately took a shot at the governor's trial balloon. However, the idea now seems to be gaining real traction in Raleigh.
In the past the legislature has give the idea a cold shoulder, even though a version of it has been enacted in nineteen other states. Accounting for the warmer reception this time around is a budget forecast with an estimated surplus between $200mm to $260mm, while the cost of the tax credit for the working poor is estimated to be between $70mm to $140mm.
Of course the continued surplus depends on that one-quarter percent sales tax as well as a temporary state income tax surcharge, both of which are set to expire on July 1st. However, Gov. Easley seems to be looking only at the continuation of the sales tax as the single revenue source for the tax credit.
Among sympathetic Democratic legislators this proposal is viewed as the next logical step after the passage of the higher minimum wage. Rep. Alma Adams, who sponsored the increased minimum wage said that, "Because there are so many people interested in this particular topic, I believe we’re going to put our heads together and come up with something."
On the other hand, the Republicans are ready to fight hard against the proposal. Sen. Berger has said that the only way he would support it is if both taxes were allowed to expire and the revenue was found by cutting other existing programs.
Of course, after several years of state budget cuts, that position is a virtual non-starter, and simply another way of saying no to that 20% of North Carolina's population with the lowest income.
According to a recent study conducted by the North Carolina Justice Center, over the last few years "North Carolina had the third highest increase in poverty rate and the tenth largest growth in percentage of people without health insurance. It also was one of only ten states to show a decline in median household income."
Hopefully the increased Democratic majorities in the State legislature will be able to overcome Sen. Berger's enthusiasm for saying no to those working, but underpaid North Carolinians who struggle hardest to get by.
- George Pence's blog
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tax credit vs. realignment
I would prefer they just CUT taxes for the working poor, then shift the tax burden off the poor and working poor to those who make over $200,000 a year.
what did i miss
We have SAFE majorities in both. Sen Berger's opposition means as much as my support.
HelpLarry.com
I wouldn't be so confident
This proposal has come up before with Democratic majorities in both chambers and it has failed. There are a number of conservative Democrats who can be inclined to lean in the wrong direction on this issue. What makes this time different, even more than the somewhat larger Democratic majority we had in the last session, is that we have a projected surplus.
Actually, I'd much rather keep the income tax surcharge in place that only affects the State's richest citizens rather than base the income tax credit for the working poor on the one-quarter percent sales tax. The sales tax is far more regressive and, at least to some extent, winds up giving back to the poor with the left hand what it takes with the right.
I swear George...
... that photo you picked for the article could not have been more apt.
I really do think the GOP believes the working poor are all alcoholic bums living on welfare under bridges.
No one thinks about the person behind the counter who is barely making ends meet. (EDIT: What am I talking about barely making? They aren't. I need coffee.) It really angers me when I hear someone being rude to waitresses or clerks cause you know they are not there for the fame.
SB
--
Town Called Dobson - Daily Political Cartoon: Not all is red in rural America!
my favorite
Repug dirty trick is the sanctimonious "Christians" who leave a little card at the table that says, "Jesus loves you dont work on Sundays" instead of leaving a tip. I wont get into all the things wrong with that because I try not to curse and scream before 10 am.
HelpLarry.com
So many things wrong with that.
Primarily the hypocrisy. If "Jesus loves" the waitperson so much that she shouldn't "work on Sundays," then the people who are patronizing her place of employ shouldn't eat out on Sundays -- so the worker they're stiffing won't have to work.
I hate people.
Jesus told me it's fine to
Jesus told me it's fine to buy beer at the grocery store on Sunday morning, but they just won't take my word for it when I try to check out.
"Beer is proof that God loves us and wants us to be happy." -Ben Franklin
The problem with tax credits
The problem with tax credits is that few people take advantage of them. The clients I work with who qualify for the federal Earned Income Tax credit look at it as "bonus", and spend it in one large lump sum (and of course that is their right - it's their money, after all). They often don't take advantage of the opportunity to get a portion of it in their paycheck (Advance EIC), which would help with everyday expenses and not cost them or their employer a cent.
While a tax credit is a step in the right direction, I'd rather see the sales tax lowered and income taxes applied equally with less loopholes for gajillionaires.
"Be the change you wish to see in the world." - Gandhi
How are these tax credits different
from the EITC? I've heard the EITC described as a "reverse income tax." I know we have it on the fed level, but I thought we don't have EITC on the state level-- the Justice Center report mentioned above called for passing it, I think.
From someone who once
got the EITC (two kids & $10/hr), I always saw my Federal Tax Refund, including the EITC, as my emergency fund ... a kind of poor woman's insurance policy.
I didn't have credit cards and the lump sum i got every spring was easier to stash away than more money in the paycheck every two weeks would have been. To me, that chunk of money represented an engine rebuild one year. Another year I used part of it for a brake job and tires. I used a part of it to pay my car insurance for half the year in a lump sum every year. Another year it was the downpayment for a better used car. And for most of those years, my tax return with the EITC added was the only way I could pay for eye exams, glasses and physicals for me and my kids about every other year. Then there was soccer and the broken ankles. ack!
The additonal money in every check would have made grocery shopping a little less stressful perhaps, but there would have been no way to save a large chunk of money for the emergencies and necessities that seemed to come along about once a year.
Understood - and I've been there, too
Heck, my EITC actually was a security deposit and first month's rent for me one year - I had to live with my parents until then. Single parenthood is a bitch.
Thing is - when talking about long term "tax relief" for the working poor; I'd rather see the sales tax reduced than a tax credit introduced. That is, if we have to make a choice. I'd actually like to see both.
I also know that not all of the families eligible for the EITC apply for it. Everyone would benefit from reduced sales tax.
The bottom line is - low income working families get the crap end of the stick most of the time; I'd like to see that change so that they have a fighting chance. As was mentioned above, sales tax is about the most regressive tax that there is - poorer families spend a larger percentage of their income on necessities, and therefore are taxed on a higher percentage of their income. And of course, they've already paid income tax on those dollars. Most of them (us?) don't have the luxury of tax shelters and loopholes to protect income from taxation, because all of their income must be liquid because of those everyday "emergencies" like tires, dentist appointments, etc. Great Gods help them if there is no health insurance as well.
::sigh:: rant off. sorry.
"Be the change you wish to see in the world." - Gandhi