Thursday, April 24, 2014

NC tax fairness RIP

Remember all those very serious explanations from Gov. Pat McCrory and the radical Raleigh Republicans regarding how their massive tax shifts and tax cuts were intended to make taxes fairer and flatter and to broaden the tax base.

Part of the deal, such as it was, was that in exchange for lower and flatten marginal personal income tax rates that would provide an enormous windfall for the wealthy, the state would also eliminate and cap a few tax loopholes.

Oh sure, those changes had the effect of erasing hundreds of millions of dollars of tax liabilities for the Governor's wealthy contributors and raising taxes on the poor and elderly, but hey, you have to break a few modest nest eggs to make a fairer, flatter, and broader tax omelet.

How long did Gov. McCrory's fidelity to fairer, flatter, and broader taxes last? Less than a year.

One of set of tax credits that was going to expire was the personal income tax credits on rehabilitating historic buildings and mills. The NC Department of Revenue estimates that the credits, which largely go to the wealthiest tax filers, depleted state coffers to the tune of $34 million in FY 2012 and will cost about $25 million per year in the next two years before their scheduled expiration.

Gov. McCrory announced yesterday that he wants to replace those expiring tax breaks with new ones.

Besides being a give-away to the rich (currently you need to pony up at least $3 million in repairs to claim the mill rehabilitation credit), the breaks re-introduce complications into the tax code and reduce state revenues.

To be fair, the credits have some worthwhile features. However, the Governor's rote response when asked about other worthy expenditures, like the Earned Income Tax Credit for the poor or raises for teachers and state employees, is that the state can't afford them.

Similarly, there don't appear to be any plans to repeal the new tax hikes the Governor and Republicans imposed on trailer homes and modular homes. Historic homes owned by the rich get some nice tax candy; modest shelters for struggling, working families, not so much.

As this latest episode shows, fairness was never really part of the Governor's tax plans. However, his fidelity to tax cuts for the rich at the explicit expense of the poor remains intact.

Wednesday, April 16, 2014

ACA succeeding despite Republicans' scorched-earth tactics

A number of reports this week document notable successes of the Affordable Care Act (ACA) despite Republicans' scorched-earth attempts at nullification.

On Monday, the nonpartisan Congressional Budget Office (CBO) forecast that government expenditures for the ACA would be $5 billion lower than anticipated this year and $109 billion lower than anticipated for the next decade.

The budgetary news is good in and of itself, but the principal reason behind it--that private health insurance premiums would be much lower than expected (thus requiring fewer subsidies)--was even better. The lower expenditures also come despite other good but potentially costly news--higher than expected enrollments in the health insurance exchanges.

The CBO now forecasts that 12 million more Americans will have health insurance coverage in 2014 (and 19 million more in 2015) than they would have in the absence of the ACA.

Health insurance coverage would be higher still were it not for Republicans' cynical strategy to undermine the ACA for purely partisan purposes. Indeed, Gallup estimates that between 2013 and the first quarter of 2014 the proportion of uninsured non-elderly adults dropped three times faster in states that set up their own health insurance exchanges and accepted the federal government's fully-paid offer to expand Medicaid coverage to low-income working families than in states that rejected these policies.

The truly despicable aspect of Republicans' nullification strategy is its cynical use of low- and moderate-income workers. These are Americans who "play by the rules" by working, even though their wages are incredibly low. They are also the Americans that Republicans say that the non-working poor should emulate.

Unfortunately, they are also the Americans that Republicans have thrown under the bus, by denying many access to Medicaid.

How perverse are these policies? Consider North Carolina, where a working single mother with one child loses eligibility for Medicaid once her countable income reaches $434 per month. A single mother in a minimum-wage ($7.25/hour) job would lose her eligibility after working 83 hours per month (20 hours per week). Talk about cruel incentives and a horrible choice--work more than part-time or have health insurance!

In other Republican-led states, governors and legislators have undermined the ACA (and their own constituents) by going after organizations that helped to sign low- and moderate-income families up for federally-subsidized insurance.

And these actions have been compounded by Republican actions to underfund the ACA's implementation and to sow as much uncertainty and confusion as possible.

In all of this, who gets hurt? Low- and moderate-income working families without insurance.

And despite this, the law is working.