NC JUSTICE NEWS: Protecting Medicaid + Unemployment Insurance + Corporate Tax Holiday

October 11, 2011

POVERTY ON THE RISE: Low-, middle-income families hit hardest
Imagine an entire decade of your life where nothing improved – a period where your income and well-being only seemed to diminish, even as you got older and took on more responsibilities in your everyday life.

This is a reality for many low- and middle-income families across North Carolina who experienced what the Budget & Tax Center deemed a “lost decade” between 2001 and 2010, when the poverty rate increased from 14.1 to 17.5 percent. During this time, North Carolinians at the bottom of the income scale fell further behind, leading to the highest poverty rate since 1981.

Since 2001, the median household income in North Carolina dropped nearly 10 percent, from $47,823 in 2001 to $43,326 in 2010. Even though the state’s working-age population grew by nearly 820,000 individuals over this period, there are now approximately 356,600 fewer working-age adults employed than there were 10 years ago. Worst of all, there are currently 1 in 4 children living in poverty, up from 1 in 5.

It’s not enough for policymakers to simply look at the current numbers when they’re considering solutions to economic distress – they have to consider these very real, decade-long trends of increasing poverty across the state as well as North Carolina's slow economic recovery. Lawmaker's strategies to address poverty could include:

  • Maintaining unemployment insurance payments that keep families out of poverty and boost local economies
  • Increasing the state’s Earned Income Tax Credit
  • Maintaining requirements for corporate subsidies to meet wage and benefit standards
  • Modernize the state’s revenue system to ensure investment in public structures

State policymakers have the ability to keep rising poverty in check through their policy choices. They must act now to help curb the rising struggles for working North Carolinians.

MEDICAID'S PURPOSE: How the crucial program aids all citizens

It's hard to imagine, but someday Medicaid could be all that stands between you and crippling financial struggle.

The state-federal program has acted as a safety net for many middle-class North Carolina families whose medical bills have exceeded their incomes, savings and insurance coverage due to challenges such as advanced age, injury, disease and more serious medical events. In many cases, Medicaid serves as the only barrier between thousands of families and financial ruin.

The state’s Medical Care Advisory Committee is currently poised to make major changes to the Medicaid program due to deep budget cuts, and these changes should not be taken lightly. That’s why it’s up to everyday North Carolinians – even those who haven’t yet needed the added safety net of Medicaid – to help convince MCAC to fight for Medicaid. A few reasons Medicaid deserves protection:

  • Many beneficiaries of the program come from middle-class households – not just those on the low end of the poverty scale
  • Cuts to Medicaid and the elimination of “optional” services would affect the economic security of thousands of middle-class North Carolina families
  • Medicaid widely invests in the health and well-being of North Carolina’s children

One thing is obvious: “Savings” (i.e. cuts) in Medicaid will most often result in decreased access to health care. Severe cuts will affect every North Carolinian – families, health-care providers, and children – and directly affect the state’s struggling economy. It’s more important than ever to understand how much every individual’s security is tied to the future of this critical program.

UNEMPLOYMENT INSURANCE: Policy solutions for the program

Unemployment insurance has never been more important than now, a time when unemployment still hovers over 10 percent and job growth lags throughout North Carolina. This insurance not only lends support to local businesses and struggling families – it also offers a huge boost for local economies, generating an estimated in $23.3 billion in economic activity across the state.

Yet the funding for the unemployment insurance system is in dire need of key policy changes so that they can return to solvency. The unemployment trust fund was below safe levels even before the Great Recession, due to a series of tax changes in the 1990s that reduced how much employers were required to contribute to the fund. In turn, the fund was already gravely weakened by the time unemployment plummeted and job creation slowed in the wake of the recession.

North Carolina lawmakers do have policy options to help create an unemployment insurance system that is equitable, sustainable, and helps set the fund on the path to solvency. For example, lawmakers could expand the taxable wage base through better indexing to allow financing of the unemployment insurance system to keep pace with the loss of wages.

On a national scale, the American Jobs Act also includes a provision that would extend the current federal emergency unemployment insurance program, benefitting more than 90,000 workers in North Carolina and providing support to local economies and businesses. Investing these dollars would benefit everyone through shared opportunity and the chance for a strong recovery.

HAGAN'S CORPORATE PUSH: Act offers tax break on overseas investments

Last week, Sen. Kay Hagan made a push for new legislation that would slash corporate tax rates for U.S.-based companies on overseas earnings. Various North Carolina companies joined the Democratic senator in supporting the “Foreign Earnings Reinvestment Act,” co-sponsored by Hagan and Sen. John McCain of Arizona, which slashes the corporate tax rate from 35 to 8.75 percent. If the companies add to domestic payrolls, they get an even larger break and will ultimately only be paying 5.25 percent in taxes on the money they accrue internationally.

However, many corporations with a presence in North Carolina have already received considerable breaks and benefits but have failed to translate those tax breaks into jobs. Introducing a bill that gives away even more to corporations seems particularly ill-timed, as individuals across the country are currently out in the streets, protesting the problematic relationships between corporations and the country’s political leaders and systems. A bill cooked up by politicians that favors large corporations seems equally questionable, regardless of how well-intentioned the bill's architects claim to be.

Past experience has shown that similar tax repatriation holidays – including a corporate tax break on foreign profits in 2004 – have failed to spur hiring or lead to economic growth. Such holidays often end up benefiting shareholders and no one else. In fact, a second tax repatriation holiday would actually encourage corporations to move even more investment overseas in anticipation of another tax repatriation holiday in the future. In addition, many of these corporations are already sitting on large sums of money that are not being invested in local economies. Why would this new tax break make any difference?

CAMPAIGN FOR BETTER CARE: Lunch for older adults, caregivers

Join the NC Justice Center and AARP NC on Wednesday, November 2 for the next Campaign for Better Care community luncheon and make your voice heard on one of the most important, complex issues in North Carolina today.

The Campaign for Better Care aims to make improvements in the health system for vulnerable, older adults, and build a strong, lasting consumer voice for better health care. Come and share your experiences about what you think needs to be changed in our health system, and take advantage of the expertise offered from the AARP and the Seniors’ Health Insurance Information Program (SHIIP).

The free event will be held from 11:30 a.m.-2:00 p.m. at the Northeast Regional Library in Wilmington. To reserve your space, contact the disAbility Resource Center at 910.815.6618 or Nicole Dozier at or 919-856-2146. For more information, visit the NC Justice website.


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