Immigration Reform Isn’t Republican or Democratic — It’s Commonsense

November 25, 2013. An op-ed by Congresswoman Elizabeth Esty of Connecticut about the benefits of immigration reform. Esty is a Democrat, but as she stresses, this should not be a Democratic or Republican issue; it is an American issue. In making the case, she cites FPI’s report on small business owners:

Since taking office, I’ve had the honor of meeting with business owners from around our district and our state. They are eager to share with me their successes as well as their concerns. When I ask what I can do to support them as they grow their businesses and create jobs, many say the same thing: Congress must fix our broken immigration system.

From the labs of our universities, to construction sites in our towns, to the small businesses on our Main Streets, and every job in between, immigrants make critical contributions to our economy here in Connecticut. As of 2011, almost half a million immigrants live in our state, and they make up more than 16 percent of our workforce.

Nationwide, immigrant-owned small businesses employed more than 4 million people in 2007, and 18 percent of small business owners in the United States are immigrants, according to the Fiscal Policy Institute.

 

New Report Examines Shale Drilling Impact

November 21, 2013. Drilling in the six states that span the Marcellus and Utica Shale formations has produced far fewer new jobs than the industry and its supporters claim, according to a report by the Multi-State Shale Research Collaborative, a group of research organizations tracking the impacts of shale drilling that includes the Fiscal Policy Institute.

The Marcellus and Utica shale formations span six states: New York, Ohio, Pennsylvania, West Virginia, Maryland, and Virginia. Natural gas development in these six states was fueled by high commodity prices from 2000 to 2008. As prices have declined more recently, gas drilling activity has slowed while development of higher-priced oil has accelerated.

Recent trends are consistent with the boom and bust pattern that has characterized extractive industries for decades. It also points to the need for state and local policymakers to collaborate to enact policies that serve the public interest.

Below are the key findings from the new report:

  • While shale-related employment has made a positive contribution to job growth, the number of jobs created is far below industry claims and remains a small share of overall employment in the region.
    • Between 2005 and 2012, less than four new direct shale-related jobs have been created for each new well drilled, much less than estimates as high as 31 direct jobs per well in some industry-financed studies.
    • Region-wide, shale-related employment accounts for just one out of every 795 jobs. By contrast, education and health sectors account for one out of every six jobs.
    • Job growth in the industry has been greatest (as a share of total employment) in West Virginia. Still, shale-related employment is less than 1 percent of total West Virginia employment and less than half a percent of total employment in all the other states.
  • Many of the core extraction jobs existed before the emergence of hydrofracking.
    • Together, Pennsylvania, Ohio, and West Virginia had 38 percent of all producing wells in the country in 1990 and 32 percent in 2000.
    • Some counties with a long history of mineral extraction have experienced a shift in employment from coal to shale extraction.
  • Industry employment projections have been overstated.
    • Some industry supporters have equated “new hires” with “new jobs” and attributed ancillary job figures to shale drilling even when they have nothing to do with drilling.
    • Industry-funded studies have used questionable assumption in economic modeling to inflate the number of jobs created in related supply chain industries (indirect jobs) as well as those created by the spending of income earned from the industry or its suppliers (induced jobs).
  • Drilling is highly sensitive to price fluctuations, which means that job gains may not be lasting.
    • In some counties, employment gains have been reversed as drilling activity shifted to more lucrative oil shale fields in Ohio and North Dakota.
    • Direct shale-related employment across the six-state Marcellus/Utica region fell over the last 12 months for which there are data — the first quarter 2012 to the first quarter 2013.

Press-Release

Full Report

MSRC Report Overview

Visit the  Multi-State Shale Research Collaborative web site for more information, reports, and resources.

Statement on the Solomon/McCall Tax Reform and Fairness Commission Report

November 14, 2013. Statement from Ron Deutsch, Executive Director, New Yorkers for Fiscal Fairness, and Frank Mauro, Executive Director, Fiscal Policy Institute.

Any discussion of fair taxation in New York must acknowledge that our state has the greatest income inequality in the nation and that our tax system is partially to blame. We are experiencing record child poverty rates and levels of hunger and homelessness that are unprecedented. Too many of our residents are suffering and struggling to make ends meet and today’s report by the Governor’s Tax Reform and Fairness Commission does little to address this growing problem. The report discusses expanding the Earned Income Tax Credit, which we believe would be a great mechanism to begin to help these desperate families. Noticeably absent are any proposals to address the state’ income tax structure which needs to be made more progressive in order to begin to raise the needed revenues to address our growing income inequality and which the Commission was originally charged with examining.

The Governor’s Tax Reform and Fairness Commission has developed a package of tax options that is literally a smorgasbord of reforms with a little something for everyone. We support many of the proposals from the Commission and strongly support scaling back our system of tax credits to big business and making them more accountable and transparent.

While the commission did meet with our organizations and a number of business, labor and tax reform groups, the broader public, the people that pay taxes, need a chance to weigh in. We strongly recommend that the Governor’s office and the Commission hold a series of public hearings to get input from the general public on these critically important tax issues. We further recommend that the Commission develop a website to post their findings and take recommendations from the public.

We applaud the commission for submitting revenue neutral recommendations. Further draining state revenues at a time when needs are so great would be a huge mistake. Further cuts in essential state and local public services would create an unwarranted drag on the economy in the short run and hurt the state’s economic competitiveness in the long run.

The report raises a number of questions:

The report mentions the possibility of providing some sort of targeted property tax relief for residents (by tying your property tax burden to your income—commonly called a circuit breaker). We believe that this is the most important and critical tax relief mechanisms recommended in the report and were happy to see its inclusion.

A Fiscal Policy Institute analysis of the US Census Bureau’s American Community Survey (ACS) microdata confirms that hundreds of thousands of low, moderate and middle-income families in New York State are already paying an inordinate share of their income in property taxes on their primary residences. The situation in which these families find themselves will not be addressed by New York’s cap on the growth of local governments’ property tax levies. Only a middle-class Circuit Breaker can provide effective relief for these families in a targeted and cost-efficient manner. The report recommends that $400 million of the revenue that would be generated by eliminating the sales tax exemption on clothing under $110 be used to “provide broad-based real property tax relief.”  We believe that $400 million is woefully inadequate given the enormity of the excess property tax burden borne by many low- and middle-income households.

The report does, however, say that some or all of another $1 billion that could be generated by other sales tax base broadening could be used for “future” property tax relief.  But it also leaves open the possibility that some or all of this revenue could be used for personal income tax relief. It would be extremely unfortunate if some of these resources went to reducing the top rate on the income tax for high-income households at a time when the property tax remains so burdensome for so many low- and middle-income families and when the state continues to cut needed services and insist that it cannot afford to fully fund its foundation formula for public schools.

The Commission’s proposal to eliminate the sales tax exemption on clothing under $110 also requires additional scrutiny. While this proposal is regressive in nature, the Commission recommends “targeted tax relief to ‘make whole’ low- and middle-income taxpayers impacted by the sales tax base broadening.” But the report never presents an incidence analysis of the clothing sales tax exemption; nor does it indicate the income thresholds for this “targeted” tax relief. The report, however, does provide the following information regarding the impact of the state’s sales tax exemptions for “certain necessities” including clothing:

Of the $3.2 billion the State annually forgoes in revenues as a result of these tax exemptions, only $900 million—less than one-third—benefits households earning under $50,000, while households earning in excess of $100,000 reap $1 billion in tax savings.

The report uses this information to argue that exempting necessities from the sales tax is a “highly inefficient way to protect lower income households.” But it never mentions that these figures mean that $1.3 billion of these “savings” go to households with incomes between $50,000 and $100,000. Nor does it indicate how households with incomes in this range would fare on net, factoring in both the elimination of the clothing exemption and the “making whole” of middle-income taxpayers.

The Commission proposes to raise the threshold on the Estate Tax from $1 million to $3 million stating:

The current exemption threshold of $1 million has been criticized as too low given significant increases in the value of assets and concerns that it may serve as a factor in taxpayer migration from New York to other states (e.g. Florida) that do not impose any estate tax.

There seems to be a great deal of worry about wealthy people migrating out of New York State with little concern for the low and middle income families that are moving because they cannot afford the property tax burden. While New York had a high rate of net domestic out-migration from 2000 to 2010, the IRS’s bottom line income tax data shows that New York’s share of the nation’s highest income taxpayers and its share of the income of the nation’s highest income taxpayers increased over this ten-year period. The number of federal taxpayers with Adjusted Gross Income (AGI) above $1 million increased 17.1 percent nationally between 2000 and 2010 but 38.9 percent in New York State! And, the amount of these taxpayers’ AGI increased 20.8 percent nationally but 57.4 percent for federal taxpayers from New York.

Almost 3.2 million New Yorkers to See a Cut in Food Assistance Beginning Today

November 1, 2013. Beginning today, almost 3.2 million people in New York will see their food assistance benefits cut as the federal government ends a temporary boost to the Supplemental Nutrition Assistance Program (SNAP). The New Yorkers affected by this cut—in what used to be known as the “food stamps” program—include more than 1.2 million children and over 1 million elderly and disabled individuals. Overall, New York residents will receive $332 million less in SNAP benefits in the 11 months from November 1, 2013 through September 30, 2014.

Today’s cut hits all of the more than 47 million Americans, including 22 million children, who currently benefit from SNAP. The boost in benefits expiring today was part of the 2009 American Recovery and Reinvestment Act (ARRA). This increase was implemented to strengthen the economy while easing hardship for needy families.

For a family of three in New York, today’s cut will mean a reduction of $29 each month. This is a serious loss for families whose benefits, after this cut, will average less than $1.40 per person per meal.

“While the Great Recession is officially over, the economy has not bounced back with the strength of previous recoveries. For those families that are suffering the most from our nation’s unacceptably high unemployment and underemployment rates, this is not the right time to eliminate the small but crucial increase in SNAP benefits that the federal government has been providing,” said Frank Mauro of the Fiscal Policy Institute.

In addition to helping to feed hungry families, SNAP is one of the fastest, most effective ways to stimulate a struggling economy. Every $1 increase in SNAP benefits generates about $1.70 in economic activity.[1]

On top of the cuts going into effect today, the U.S. House of Representatives recently passed legislation that would cut an additional $40 billion from SNAP, potentially eliminating assistance for at least 211,000 people in New York and nearly 4 million nationwide. That legislation would provide strong financial incentives for states to reduce the number of people receiving assistance,[2] making it significantly harder for struggling families to put food on the table, and completely eliminating assistance for some of the poorest Americans. The House-passed plan for SNAP coupled with today’s cuts would deal a significant blow to millions of Americans who continue to struggle to make ends meet as the economy continues its slow and uneven recovery.


[1] Center on Budget and Policy Priorities, November 1 SNAP Cuts Will Affect Millions of Children, Seniors, and People with Disabilities: State-by-State Figures Highlight the Impacts Across the Country, October 24, 2013 at http://www.cbpp.org/cms/index.cfm?fa=view&id=4036#interactiveMap.

[2] A provision in this legislation would allow states to cut off SNAP benefits to most adults if they are not working or participating in a work or training program for at least 20 hours a week. States could keep half of the federal savings from these reductions and use the funds for any purpose. Moreover, states that do not utilize this option would lose all federal matching funds for their SNAP employment and job training programs. This means that states like New York that run strong SNAP employment and training programs would have to choose between altering their current programs to satisfy the new federal requirements, or losing all federal matching funds.

Further information on the upcoming cuts can be found at SNAP Benefits Will Be Cut for All Participants in November 2013, Center on Budget and Policy Priorities: http://www.cbpp.org/cms/index.cfm?fa=view&id=3899 and Cuts in House Leadership SNAP Proposal Would Affect Millions of Low-Income Americans, Center on Budget and Policy Priorities: http://www.cbpp.org/cms/index.cfm?fa=view&id=4009.

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