Congress’ top 2017 priority should be poverty alleviation by EITC Expansion

January 27, 2017. As part of a campaign launched earlier this fall, and in recognition of EITC Awareness Day, over 60 New York-based organizations representing hundreds of thousands of residents throughout the state sent a letter to Senator Schumer urging him to stand strong in his support for expanding the federal Earned Income Tax Credit (EITC) for working adults not raising children in the home. This expansion would help 1.1 million workers (466,000 of whom are actually taxed into – or deeper into – poverty) in New York State, and 7.5 million workers across the country.

The letter underscores the critical nature of the tax credit in helping working individuals stay out of poverty. Jennifer Jones Austin, CEO & Executive Director of the Federation of Protestant Welfare Agencies asserts that “it is imperative that we expand the Earned Income Tax Credit (EITC) to ensure that young people, workers without children and rural workers don’t get taxed deeper into poverty.” She further notes that “the proposed expansion is a common sense bill that will support more than one million New Yorkers, in addition to lifting millions of workers across the country out of poverty.”

According to Ron Deutsch, Executive Director of The Fiscal Policy Institute, “The EITC has been tremendously successful promoting work among low-wage working families with children.” In fact, 1.9 million households in our state currently receive the credit, which helps them keep more of their hard-earned wages to meet their basic needs, escape poverty, and become more self-sufficient.

The EITC, however, is either unavailable to low-wagEITC 3e workers who aren’t raising children in the home, or too small to offset their federal income and payroll taxes. “In some cases, workers whose incomes are at or just above the federal poverty level actually get taxed into, or further into poverty,” says Deutsch. “Expanding the EITC to cover young workers as well as individuals not raising children in the home is a sensible, bipartisan-supported solution to poverty alleviation throughout our state,” he contends.

Expanding the EITC for workers not raising children has champions on both sides of the aisle, including House Speaker Paul Ryan.

“We should make sure that in this country it always pays to work. I’d do that by increasing the Earned Income Tax Credit for childless workers,” said Representative Ryan. “This is a population we want to get into the workforce, and raising the EITC raises the incentives for people to work, and helps bring them into the workforce,” Ryan further stated.

Senators Schumer and Gillibrand have already signed on to legislation sponsored by Senator Sherrod Brown (D-OH) addressing EITC expansion (click here for a NYS fact sheet on the impact of EITC expansion). This bill (S. 1012) would both expand the EITC to low-wage workers not raising children between the ages of 21-24, as well as make the EITC more adequate for all low-income workers not raising children. This proposal would improve the lives of roughly 1.1 million low-wage, childless workers in New York State, including the 466,000 currently taxed into poverty, 27,000 current and former members of the military, 282,000 young workers, 309,000 Latino workers, 183,000 African-American workers, 113,000 Asian workers and 60,000 workers in rural areas.

“Thousands of young low-wage New Yorkers aged 21-24 who aren’t raising children are not eligible to receive the federal (or state) EITC, among them, thousands of youth who have aged out of foster care – more than 30% of whom experience homelessness.  These young people should be eligible for the federal EITC so they are not taxed into poverty, but instead are given a better chance to work their way into economic security,” said Kate Breslin, President & CEO, Schuyler Center for Analysis & Advocacy.

Reg Foster, President & CEO of United Way of New York State, further adds that “United Ways have a long-standing commitment to helping communities understand the value of the EITC and helping eligible wage earners access both the EITC and VITA (Volunteer Income Tax Assistance) sites.” He continues, “The EITC really helps families achieve economic self-sufficiency. Expanding it will surely help more workers who are struggling to get by.”

The campaign maintains that expanding the EITC is a real solution to very real issues in our communities because:

  • The EITC encourages and rewards work. During the 1990s, EITC expansions did more to raise employment among single mothers with children than either welfare reform or the strong economy. But the EITC fails to provide a meaningful work incentive for workers not raising children.
  • The EITC reduces poverty. The EITC already lifts 6.5 million people nationwide out of poverty each year. Expanding the EITC would give 1.1 million more working people in New York State more financial stability to cover the basics, and help as many as 16 million working people across the country.
  • The EITC boosts communities. EITC recipients can take the income they get back and spend it at local businesses in our region, paying for basics like transportation and food.
  • The EITC is an opportunity for cooperation, as it has a long history of bipartisan support. Expanding the EITC for workers not raising children has champions on both sides of the aisle, including House Speaker Paul Ryan. This is a rare opportunity for bipartisan cooperation that should be seized.
  • Governor Cuomo has also recognized and invested in the need to address poverty alleviation. Last year, Governor Cuomo introduced a $25M Empire State Poverty Reduction Initiative (ESPRI) to bring together state and local government, non-profit and business groups to design and implement coordinated solutions to decrease poverty in ten communities across upstate New York. Expanding the federal EITC is real step in the right direction to alleviate poverty in all communities throughout our state.

Deutsch further emphasizes, “The Earned Income Tax Credit is one of our best tools to reduce poverty and economic hardship. Senator Schumer has an opportunity, as a leader in this new Congress, to advance a proactive and bipartisan agenda to help boost working people by expanding the EITC.”

Friday, January 27, is EITC Awareness Day, an annual occasion to ensure that millions of low-and moderate-income workers are aware of the credit—and this year, an opportunity to raise awareness about the need to expand the EITC for workers not raising children.

2017 Albany Annual Budget Briefing

On Tuesday morning, February 7, 2017, the Fiscal Policy Institute will present its twenty-seventh annual budget briefing in Meeting Room 7 of the Empire State Plaza Convention Center. Please note the venue change for this year’s briefing. A complimentary breakfast and check-in will begin at 8:30 a.m. Our presentation begins at 9:00 a.m. and ends at 10:00 a.m. We hope that you and/or members of your staff will be able to join us for what we are confident will be a useful and informative session. You can RSVP online here.

The briefing will examine various aspects of the governor’s Executive Budget including such topics as:

  • Income Inequality in New York State: Income inequality has been growing over the past five years in NYS. How do the governor’s budget proposals and our current tax system affect this major problem? We will provide the most recent research and analysis on the issue.
  • Millionaires’ Tax: The governor has made the temporary extension of the millionaires’ tax a centerpiece of his Executive Budget proposal. FPI will provide details on how state residents are impacted and the reasons we should not only extend, but expand, this progressive tax. FPI will present an alternative tax proposal to create a more permanent and equitable rate structure for NYS.
  • Federal Funding at Risk: With over one-third of our budget coming from the federal government there is great concern as to how policy changes in Washington will impact our state’s finances. Based on current proposals, we will detail the potential impact that federal policy changes could have on health insurance, social services, Medicaid, and taxes, and explore ways to address these potential funding shortfalls.
  • Austerity Budgeting/Financial Plan: What are the impacts of continued austerity spending resulting from the governor’s self-imposed 2 percent state spending cap? Is it necessary to continue this austerity spending which will result in billions in unspecified cuts in out-years when incomes and tax receipts are growing faster than 2 percent per year? FPI will provide an analysis of the negative impacts of the cap on state agencies, human services and local governments.
  • FY 2018 Executive Budget: What are the major policy issues that the governor addresses in the Executive Budget? What are the glaring omissions in the issues being addressed? What is the overall impact of the governor’s proposed budget on the ability of the state to meet its major social and economic challenges and opportunities such as the exceptionally high child poverty rates in the major upstate cities? We provide our analysis of the governor’s proposals on taxes, education, human services, economic development, housing, local government, minimum wage, and more.
  • Shared Opportunity Agenda for New York: FPI will outline progressive public policies that can be adopted to ensure that we create more shared opportunities to help lift New Yorkers out of poverty and provide avenues for upward mobility.

If you have any questions about the February 7th briefing or about any budget or economic policy issues, please contact us by telephone at 518-786-3156 or by e-mail at info@fiscalpolicy.org. For more information on FPI and its work, and for copies of all of FPI’s publications, please visit our website at www.fiscalpolicy.org.

Please register by Monday, February 3, 2017.

Statement on Governor Cuomo’s FY 2018 Budget Proposal

January 18, 2017. Making state and local taxes less regressive in New York is a top priority for our organization. We are pleased to see the Executive Budget proposal include an extension of the millionaires’ tax and applaud the Governor for making this the centerpiece of his new budget. Given the great income disparities in our state, we think the Governor and the legislature should go further. We would like to see the millionaires’ tax made permanent and to have additional brackets added at the top end to make it even more progressive. This would help balance out the regressive nature of New York’s overall tax structure, where the wealthiest 1 percent pay a smaller share of their income in state and local taxes than do the bottom 99 percent.

Many of the Governor’s budget priorities are premised on the essential extension of the millionaires’ tax that provides $3.5-$4 billion in annual revenues (from less than 1 percent of taxpayers, many of whom are non-residents). These funds are critical to offset the middle class income tax reductions enacted last year, as well as the Governor’s innovative proposal that would jump-start a conversation about how to make CUNY and SUNY quality institutions that are affordable to all New Yorkers.

Given that the middle class income tax reductions only apply to families with taxable incomes over $40,000, we support the Governor’s push to enhance the Child and Dependent Care Credit (CDCC). The CDCC improvements should be made effective this year (not next year), and the Earned Income Tax Credit (EITC) enhanced to be even more effective by increasing it to 40 percent of the federal credit (currently at 30 percent of federal EITC). This would ensure that lower income families also get much-needed tax relief.

Maintaining the upper income tax surcharge is also important given the uncertainty of what might happen to funds coming from Washington. Federal funds account for more than a third of the $152 billion FY 2018 state budget, providing critical resources to fund a broad range of needs, including health care, education, child welfare, housing and the social safety net. We could lose billions in federal funds particularly if the Affordable Care Act is fully or partially repealed and millions of New Yorkers lose health insurance. New York should consider a tax recapture plan to offset federal spending reductions if such cuts accompany federal tax cuts disproportionately favoring the wealthy.

Extending tax credit will help low-wage workers

January 10, 2017. The following op-ed by Ron Deutsch appeared in the Buffalo News.

Poverty. While it may not be the glitz and glamour of a flashy news story, it is a very real and pervasive issue for millions of Americans, particularly in New York State. As such, and especially in the aftermath of the 2016 election, it should be clear to members of both political parties that struggling workers face real challenges and need real solutions.

The need in our state is great. In New York, 44 percent of working households struggled to afford basic household necessities in 2014. That’s according to the United Way’s recent ALICE report.
ALICE, which stands for Asset Limited, Income Constrained, Employed, is a national project that applies research-based analysis to lend a voice to New Yorkers who work hard, yet still struggle to keep up with the cost of living.

The United Way report examined the needs and hardships of the growing number of households that do not earn enough to make ends meet. In Erie County, 41 percent of residents are deemed “working poor,” and in the City of Buffalo alone, that figure jumps up to an astonishing 60 percent.

Even worse: 466,000 workers not raising children in our state—and 7.5 million workers across the nation—are currently taxed into or deeper into poverty, largely because they are left out of the Earned Income Tax Credit (EITC) that families with children in the home receive. These are folks with low-wage jobs who are so on the brink that, after taxes, they find themselves actually at or below the poverty level. These are young workers trying to build a strong and stable future. These are working, noncustodial or older parents supporting their children who aren’t living in their home. These are working veterans and active military members and working, single New Yorkers.

The bottom line is that no working American should be taxed into—or deeper into—poverty. One bipartisan solution can be found in the Earned Income Tax Credit, which has helped struggling working families climb out of poverty but leaves out or barely helps millions of workers who don’t have children or aren’t raising them in their home.

Fortunately, there may be an opportunity to address this issue soon. Press reports indicate that President-elect Donald Trump and Republican leaders in Congress are planning to pursue tax reform, which would likely include significant tax breaks for corporations and high-income taxpayers. Low-wage workers spoke loud and clear during the presidential election, wanting Congress and the next administration to address their concerns. Lawmakers have a responsibility to ensure that struggling workers—such as those who are currently excluded from the EITC—also receive tax relief, should a tax package be presented.

Sens. Charles Schumer and Kirsten Gillibrand and Rep. Brian Higgins should join with the new president and their colleagues in Congress—including House Speaker Paul Ryan, who has also supported EITC expansion—to ensure that no working American is taxed into poverty by working to expand the EITC for low-wage workers not raising children in the home.

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