Time to bring back some help for low wage workers
Published February 20, 2015
by Chris Fitzsimon, NC Policy Watch and NC SPIN panelist, February 19, 2015.
Half the states in the country currently provide help for their low-wage workers with a state Earned Income Tax Credit patterned after the federal EITC that former President Ronald Reagan called the best anti-poverty program Congress ever created.
The credit puts money back in the pockets of workers by offsetting some of their payroll tax deductions and helps the economy too, as the workers almost always use the credit to buy necessities for their families.
North Carolina used to provide a state EITC until the current leadership of the General Assembly and Governor Pat McCrory allowed the credit to expire and defeated repeated attempts to renew it.
That gave North Carolina the dubious distinction of being the only state ever to have eliminated an EITC and it means that close to a million people who work hard every day in low wage jobs have lost a little extra help keeping their heads above water.
The EITC is back on the table in the General Assembly this session, part of an economic incentives bill filed by a group of House Democrats and it is especially timely.
The Senate recently approved an increase in the state gas tax which falls harder on folks at the bottom of the economic ladder, the same people most likely to be struggling despite the state’s recovering economy.
They can hardly afford to pay more to get to a job that barely pays enough for them to survive.
The vast majority of the jobs created since North Carolina started coming back from the Great Recession in 2009 pay less than what it takes for one worker with a child to make ends meet. More than half the jobs pay less than the federal poverty line.
Those are precisely the people the federal and state EITC were designed to help.
The states that still provide the credit to their workers include many with conservative political climates, Indiana, Nebraska, Louisiana and others, and not too long ago the EITC enjoyed some bipartisan support in North Carolina.
That has largely evaporated in the last few years despite many folks currently in power listing President Reagan as their political hero.
Some of the opposition is based on wildly inflated claims of fraud, some of it on a philosophical push for a flat tax structure with few credits or loopholes—a push for tax purity that seems to disappear when an airline wants a break on fuel taxes or agribusiness wants preferential treatment for seed or fertilizer.
A report from the Center on Budget and Policy Priorities finds that the federal EITC is the most effective weapon in lifting families out of poverty, helping more than 6 million people past the poverty line in 2013—more than half of them children.
The federal credit kept 300,000 people in North Carolina from falling below the poverty line from 2010-2012 and half of them were children too.
The state EITC was created to supplement that. Among those it helped were 64,000 military families that have now lost the credit too.
Governor Pat McCrory has been crisscrossing the state in recent weeks building the case to reinstate the historic tax credit program that helps revitalize downtowns and creates thousands of jobs.
McCrory also allowed that tax credit to expire but has seen the error of his ways and is now fighting to restore it and he’s right.
Lawmakers should bring back the historic tax credit but they can’t stop there. They need to help a million low wage workers too and rejoin the 25 other states that are building on Ronald Reagan’s legacy of encouraging and rewarding hard work with a state Earned Income Tax Credit.
In this era of rising gas taxes and explosion of low-wage jobs, it’s the least they can do.
February 20, 2015 at 8:42 am
Richard Bunce says:
Inability to understand the State tax code changes running rampant. The standard deduction was more than doubled so that all taxpayers would benefit. Chris wants to go back to tax breaks targeted at small groups of Democratic voters. Most low income tax did not have substantial deductions before the tax change so for them a lower tax rate and a more than doubled standard deduction is a more beneficial tax code for them. Chris's friends who lost all their special interest provisions built up over a century of Democratic Legislatures do not want to share the tax deduction benefit with their fellow man.
February 20, 2015 at 10:02 am
Frank Burns says:
We have created a system where one half of the population pays no income tax, and many receive a tax refund as well. They have representation but no taxation and therefore no incentive for them to endorse policies to cut taxes and spending. All citizens should pay some taxes.
