Womenstake

It’s Time to Stop Helping Wealthy Tax Evaders

by Reggie Oldak, Senior Counsel,
National Women's Law Center

The House could do the right thing today.

For years, the National Women's Law Center has been calling for an end to special treatment that enables some of the wealthiest Americans to pay lower income tax rates than ordinary working Americans and dodge payroll taxes at the same time. Private equity fund managers do this by making payment for their services look like a return on passive investment (unearned income) instead of ordinary compensation (earned income).

A bill up for consideration would finally close the loophole for what some call “carried interest”. We call it payment for services, and we think it’s high time struggling families who lack health care, adequate nutrition, and quality child care stop picking up the tab.

The National Women's Law Center has joined with other national organizations to support H.R. 4213, which would fairly and responsibly offset the cost of "tax extenders," those provisions that Congress periodically passes to extend, for a year or so, various temporary tax breaks. We have our doubts about some of the extenders, which mostly benefit corporations, but we support the bill because, in addition to finally closing the “carried interest” loophole, the bill would reverse Congress's tradition of increasing the budget deficit every year by extending these "temporary" tax breaks without paying for them.

The bill also would begin to crack down on very wealthy individuals and corporations who evade taxes by hiding money in countries known as “tax havens.” And, it would require that Congress evaluate the effectiveness of corporate tax breaks before extending them each year, as it does for discretionary spending on programs that assist low-income women and their families. 

Health Care Reform Is Good for Small Businesses – Especially Women's

by Reggie Oldak, Senior Counsel,
National Women's Law Center

My father owned a small business. So I grew up understanding the difficulties and pressures small businesses face: hiring, retention, the high cost of providing benefits, the need for investments in equipment or inventory, for example.

But I don’t understand claims that the America’s Affordable Health Choices Act of 2009 (H.R. 3200), now being considered in the House, will hurt small business. Yes, small businesses have a hard time finding affordable health insurance for their employees. That’s why the bill includes insurance market reforms that will reduce costs for small businesses and a new tax credit for very small businesses to help them offer coverage. So, while the U.S. Chamber of Commerce (predictably) rants against the bill, local Chambers aren’t falling into line.

The U.S. Women’s Chamber of Commerce is taking a very different stance from the U.S. Chamber. Recognizing that women face special challenges in securing affordable health care, it urges Congress to take “swift and strong action” to reform the American health care system to provide “guaranteed, affordable, quality health care without discrimination,” including a “robust government-led public plan to take on the insurance carriers.”

They're Baaack — and Still Fighting for Irresponsible Tax Giveaways

by Reggie Oldak, Senior Counsel
National Women’s Law Center

A coalition of business groups that fought for irresponsible tax giveaways for the rich in 2001 and 2003 has returned to rail against President Obama’s budget priorities.

They call themselves the Tax Relief Coalition. Make no mistake: they’re only interested in tax breaks for corporations and the super-wealthy. They’re not really for anything other than that, but they are in “unequivocal opposition” to the budget released by the President, a budget that puts the needs of women and their families ahead of special interests.

As President Obama said this week, it’s important “that we make sure we don't find ourselves in this situation again, where taxpayers are on the hook for losses in bad times, and all the wealth generated in good times goes to those who are at the very top of the income ladder. That's the kind of ethic we've had for too long. That's the kind of approach that led us into this mess. That is something we have to change if we're truly going to turn our economy around and move this country forward.”

For the past eight years, the National Women's Law Center has opposed Administration budgets that cut supports for vulnerable women and children and neglected fundamental needs while redistributing resources to the very wealthiest and piling up debt.  President Obama’s budget sets a dramatically different course. It turns away from the failed economic policies of the past and makes investments critical to our families and our future. It makes a serious down payment on comprehensive health reform, invests in education – starting with the first years of life – provides additional supports for those who are most vulnerable, and strengthens civil rights enforcement and worker protections. And it does so in a fair and responsible way: by cutting corporate subsidies, closing corporate tax loopholes, and beginning to make the very wealthy pay their fair share of taxes.

Predictably, the special interests are mobilizing to hang on to their tax breaks, their subsidies, and their padded contracts – and defeat President Obama's budget. They must be hoping that all the people that their policies have failed are too busy struggling to make ends meet to fight back. We hope you’ll join us, and the many others in the Rebuild and Renew America Now coalition, and speak out for new priorities.

Not the Housing Help that Average Families Need

by Reggie Oldak, Senior Counsel

and Holly Hemphill, Senior Counsel

National Women’s Law Center

The economic recovery bill now being debated in the Senate contains provisions that would increase assistance for those in need, overwhelmingly women and children. However, the bill now also includes tax cuts that mainly benefit well-to-do taxpayers. The Senate voted to include a new tax credit for homebuyers who purchase a principal residence. The credit, which would reduce taxes owed dollar-for-dollar, is worth up to 10% of the cost of the house, capped at $15,000. This provision may create an incentive for a buyer who has good credit, funds for a down payment, and who expects to owe taxes -- but the credit is not refundable and does nothing for someone who is not in a position to buy a house because she has lost her job and who may be in, or on the verge of, foreclosure. This credit, estimated to cost $18.9 billion, helps those who need it least. 

The most effective way to boost economic activity is by putting money in the hands of people who will spend it quickly. Tax cuts that are most effective in promoting an economic recovery are those that go to low- and middle-income people, such as the lowered eligibility threshold for the refundable component of the Child Tax Credit and the new Make Work Pay Credit.

Incredibly, at the same time, Senators are debating amendments that would cut funds for Head Start, education (including programs for children with disabilities), and Violence Against Women Act programs.

UK Poverty Efforts Set a Good Example

by Reggie Oldak, Senior Counsel
National Women's Law Center

The Center for American Progress has a task force on poverty with the goal of cutting poverty in half in 10 years.  In the United Kingdom, they’re way ahead of us.

Tackling child poverty (and, by extension, poverty among single mothers) is high on the agenda in the UK. Almost ten years ago, the UK committed to ending child poverty by 2020. They encourage work for those who can work, and provide security for those who can’t. The national goal focused the attention of people in and out of government, and the goal itself is credited for the UK’s dramatic progress. Between 1998 and 2005, the number of children in poverty fell by 600,000 in the UK – using the UK’s measure of relative poverty. By US measures, child poverty in the UK fell even more. 

The UK directly invests in financial support for families, beginning with statutory maternity pay for nine months. Yes, they pay mothers after the birth of a child, with no limit to the number of children.  Then, they make work possible with a significant investment in childcare – including a commitment to both a Children’s Centre (child care) in every community and wrap around day care in every school by 2010 – and they make work pay – with a national minimum wage that is higher than ours and tax credits for workers. To top it all off, they have instituted improved work/life balance measures, including the right to request flexible work schedules for parents with children under 6. 

Again, a Waiting Game For Our Children

by Reggie Oldak, Senior Counsel
National Women's Law Center

A $60.3 billion energy and tax “extenders” bill passed by the House today (H.R. 7060) could boost the economy, create jobs, and help provide additional relief to struggling families. Before you bring out the champagne, however, you should know that an important provision of the bill expanding the Child Tax Credit will not take effect this year, as originally proposed.

I would have thought that, of all the people who need help in this economic crisis, low-income children and their parents should be at the top of the list, not waiting another year for help to arrive.

The Child Tax Credit can be worth up to $1,000 per child for families with children under age 17.  But, families earning less than $12,050 this year are ineligible for the refundable component of the Child Tax Credit, and millions of other low-income families receive only a partial credit because the value of the refund is based on a percentage of earnings above $12,050.  For example, under current law, a single mother earning the minimum wage who works 40 hours a week, 50 weeks a year, would earn $12,260 this year. Her Child Tax Credit would be just $32.

13 Millions Reasons to Celebrate? Not Just Yet

by Amelia Kegan, Legal Intern
and Reggie Oldak, Senior Counsel
National Women’s Law Center

At first glance, it would seem that there are thirteen million reasons to celebrate yesterday’s 93-2 Senate vote to pass the Renewable Energy and Job Creation Act, which expands the Child Tax Credit for 13 million children in low-income families.

Along with tax credits for alternative energy, an adjustment to the Alternative Minimum Tax (AMT), and a package of “extenders” of expiring tax provisions, mostly for businesses, that Congress routinely passes each year, this bill includes a provision to expand the Child Tax Credit. To receive any benefit from the Child Tax Credit this year, a family would have to earn at least $12,050. This bill would lower the Credit’s income eligibility threshold to $8,500 for 2008. Families of 13 million children would benefit – 2.9 million children would become newly eligible for the credit, and 10.1 million children would see an increase in their family’s credit amount.

The Child Tax Credit expansion is no token measure. A single mother of two who works 40 hours a week, 50 weeks a year at the minimum wage would earn $12,260 this year.  Under current law, her Child Tax Credit would be just $32 for 2008.  Lowering the income threshold to $8,500 would boost her credit to $564. 

Many Senators probably voted for the bill because of its business, energy, and AMT benefits rather than the Child Tax Credit improvement. Nevertheless, in an environment where business lobbyists far outnumber advocates for poor families, it’s reassuring that the Senate heard our voices and those of other advocates across the country and included a provision benefiting 13 million children:  a constituency that is less powerful, but surely at least as deserving.

Congress Takes Steps To Help Millions of Poor Children!

by Reggie Oldak, Senior Counsel
National Women’s Law Center

As we’ve explained previously, middle- and many upper-income families receive a $1,000 Child Tax Credit (CTC) for each child under age 17. Some poor working families who don’t owe federal income taxes benefit from the CTC, but current law requires that they have minimum earnings of $12,050 to receive at least a partial credit as a refund. If their earnings are lower, they are too poor to qualify!  Moreover, every year the minimum earnings threshold is adjusted upward for inflation. Inflation adjustments in the tax code usually help taxpayers, but this one has the opposite effect. The eligibility threshold started at $10,000 in 2001; the annual increases have excluded low-wage-earners every year whose wages failed to keep up with inflation. 

Earlier this year, the House passed legislation lowering the threshold to $8,500 for 2008, but Senate efforts have previously focused on a threshold of $10,000. 

Last Friday, Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced legislation that would lower the minimum earnings threshold to $8,500 for 2008.  If this bill is enacted, families of more than 13 million children could become newly eligible to receive the credit or receive larger credit. For a single mother working 40 hours a week, 50 weeks a year for the minimum wage, this change would mean the difference between a Child Tax Credit refund of $32 under current law and $564 under the Baucus and House-passed bills.   

We thank Senator Baucus for his efforts, and we encourage fast action on his Jobs, Energy, Families and Disaster Relief Act of 2008 (S. 3335). If enacted, it could mean real help for poor families when they file their taxes next year. But – there’s always a “but”, isn’t there? – we have to remind you that these proposals are for 2008 only. Whatever happens, we’ll be advocating for critically needed tax reforms to help low-income women and families again next year.