More About Erica Williams

Erica Williams

Erica Williams joined the Center in August 2009 as a Policy Analyst with the State Fiscal Project

Full bio and recent public appearances | Research archive at CBPP.org


Several States Considering Doing More for Working Families

February 11, 2014 at 3:56 pm

A number of states are considering creating or expanding earned income tax credits (EITCs), Pew Stateline explains, an idea that has received support from both sides of the aisle.  That’s great news for low- and moderate-income working families.  It’s also good for the nation’s future economic prospects since state credits leverage the federal EITC’s well-documented, long-term positive effects on children.  As our recent paper explains, state EITCs:

  • Help working families make ends meet.  Refundable EITCs provide low-income workers with a needed income boost that can help them meet basic needs and pay for the very things that allow them to work, like child care and transportation.
  • Keep families working.  EITCs help families that work get by on low wages, which helps them stay employed.  They are also structured to encourage the lowest earning families to work more hours. That extra time and experience in the working world translates into better opportunities and higher pay over time. Three out of five who receive the credit use it just temporarily — for just one or two years at a time — while they get on their feet.
  • Reduce poverty, especially among children.  Millions of children in working families live in poverty, and millions of families with incomes modestly above the poverty line have difficulty affording food, housing, and other necessities.  The federal EITC is the single most effective tool the nation has for reducing poverty among working families and children.  It now lifts about 6.5 million people — half of them children — out of poverty each year.  State EITCs build on that record.
  • Have a lasting effect.  Low-income children in families that get additional income through programs like the EITC do better and go farther in school.  And children in low-income families that get an income boost during their early childhood years work more and earn more as adults.  This is good for communities and the economy because it means more people and families on solid ground and fewer in need of help over the long haul.

That’s why twenty-five states plus Washington, D.C. have EITCs (see map).  Last year, Colorado and Ohio created EITCs while Oregon and Iowa improved theirs.  As a slowly improving economy boosts the fiscal outlook for states, lawmakers should follow suit and adopt or expand EITCs to help working families and children recover, too.

North Carolina Lawmakers Chart the Wrong Course

May 23, 2013 at 4:16 pm

North Carolina’s Senate yesterday passed a budget that undermines key services, including education.  This is one more step in the wrong direction for the state’s policymakers, who have spent this legislative session debating how much to cut taxes for the wealthy, how much to raise taxes on everyone else, and how massive a hole to blow in the state’s funding for schools and other services.

Under the banner of tax reform, both the House and Senate have proposed plans that center around a massive income tax cut that would mainly benefit the rich and corporations.  They’d pay for the cut, in part, with a sales tax expansion that would make the overall state tax bill fall more heavily on low- and middle-income households.  This tax shift would further exacerbate inequality in a state that already has a wide gap between the rich and the rest.  For example, poor and middle-class North Carolinians saw their incomes drop between the late 1990s and mid-2000s, while upper-class household incomes rose (see chart).

These plans come with hefty price tags.  In addition to raising taxes on low- and middle-income households, the Senate’s tax plan would open up a new budget shortfall of over $1 billion within three years.  The House plan would produce a $1.2 billion shortfall over five years.  That means that key services will take a hit.

Indeed, the Senate’s budget eliminates class size limits for grades K-3, lays off teachers, and cuts thousands of pre-k slots available to at-risk children.  This would occur in a state that over the course of the recession cut its per-student funding for K-12 education 14 percent below pre-recession levels, after adjusting for inflation.  The state also cut its higher education support per student by 15 percent over that time.  As a result, tuition at the state’s public four-year universities has jumped an average of 31 percent per student.

The harmful tax and spending ideas don’t stop there.  The legislature also is looking to eliminate the state’s estate tax — a tax that just 23 of the wealthiest estates paid in 2011 — after slashing benefits for unemployed workers and enacting legislation that scraps the state’s Earned Income Tax Credit, which helps working families with children get on a path to the middle class.

How did the legislature win public support for raising taxes on low- and middle-income households while cutting taxes for the rich and undercutting services that residents and businesses want and need?  Well, they didn’t.  A recent poll shows a large majority oppose the details of the Senate and House tax plans.

North Carolina Should Reinstate Its EITC

May 13, 2013 at 4:04 pm

The Tax Foundation’s Elizabeth Malm recently expressed concern on an issue about which we have already weighed in — North Carolina’s decision in March to eliminate its Earned Income Tax Credit (EITC), which provides important support for low-wage working families.  Before we get to Malm, here’s what you need to know:

North Carolina ended the credit as of next year, which will mean a tax hike for 900,000 working households, most of them with children to support.  Adding insult to injury, policymakers also cut the credit for this, its last year on the books, from 5 percent of the federal credit to 4.5 percent, shrinking an already modest benefit.

I wrote in February about the harm that this action would cause to North Carolina’s struggling working families — at a time when the state had just slashed its unemployment benefits and while lawmakers were considering eliminating the estate tax that’s levied on just 23 of North Carolina’s wealthiest estates.

At a recent debate, Malm described regressivity as “a very important concern” and cited the EITC as “one way that we can mitigate the regressivity concerns that do come up when we think about reducing the income tax.”  Malm and CBPP Senior Fellow Jared Bernstein agreed that North Carolina should revisit its decision to eliminate the EITC.

Meanwhile, the state will likely eliminate its estate tax, and lawmakers are considering major tax plans that would force low-income families to pay a greater share of their income in taxes while reducing the taxes of the wealthiest North Carolinians.  They should rethink tax cuts for the wealthy, especially when they come at the expense of tax credits like the EITC that help working families support themselves.

After Cutting Jobless Benefits, North Carolina Takes Aim at Working-Family Tax Credit

February 21, 2013 at 2:21 pm

The North Carolina House of Representatives voted yesterday to end the state’s earned income tax credit (EITC) for working families at the end of the year.  Coming on the heels of the state’s move last week to slash unemployment benefits by nearly three-quarters, the vote is more bad news for North Carolina workers, even as lawmakers consider eliminating estate taxes on the state’s wealthiest estates.

North Carolina would become the first state to eliminate its EITC, a credit that about half of the states have created (see map) to help working families with incomes up to roughly $50,000 make ends meet.  Some 900,000 North Carolinians claimed the credit in 2011.

As our backgrounder explains, state EITCs not only help families working for low wages meet basic needs but also reduce poverty, especially among children.  And the benefits can be long-lasting:  low-income children in families that get additional income through programs like the EITC do better and go farther in school and, as a result, work more and earn more as adults.

While eliminating North Carolina’s EITC will harm hundreds of thousands of working families, eliminating its estate tax would benefit only a handful of large estates:  those worth more than $5.25 million.  The combined result would be to shift tax burdens from wealthy individuals to middle- and low-income residents.  That isn’t in the public’s interest.

ALEC’s Radical Tax and Budget Agenda

February 12, 2013 at 11:37 am

Numerous states are considering — and some have already enacted — sweeping tax and budget proposals that follow recommendations of the American Legislative Exchange Council (ALEC), our new analysis explains, and middle- and lower-income residents could end up paying the price.  These proposals would:

cut taxes deeply for wealthy individuals, investors, and corporations; shift tax burdens substantially from well-to-do to middle- and low-income households; and impose strict constitutional or legal limits on revenues or spending that would severely limit states’ ability to provide adequate funds for education, health care, and other priorities, and impair state economic growth.

For example:

  • ALEC proposes that states repeal state personal and corporate income taxes, which provide one-third to one-half of a typical state’s funding for schools, health care, and other key services.  No state other than oil-rich Alaska has ever repealed its state income tax, but in 2012 there were major efforts in Oklahoma, Kansas, and Missouri to do so, and so far in 2013 governors and/or leading legislators in four additional states — Louisiana, Nebraska, North Carolina, and South Carolina — have proposed (or voiced plans to propose) full repeal of personal or corporate income taxes or both.
  • ALEC and its allies are working to ensure that states that now lack income taxes can never enact them.  New Hampshire voters defeated an ALEC-supported constitutional amendment on the 2012 ballot that would have banned the state from ever putting an income tax in place.  Tennessee is expected to place a similar measure on its ballot in 2014.
  • ALEC and its allies have begun promoting legislation that exempts “pass-through income” — business profits that are taxed as the owners’ personal income rather than as corporate income — from taxation.  Though ALEC advances the idea as a way to help small businesses create jobs, it mostly would benefit large, profitable companies organized as Subchapter S-corporations and limited liability corporations, as well as investment funds and private consultancies that do not create many jobs.

    In 2011, North Carolina enacted the nation’s first-ever exemption of pass-through income up to $50,000 per taxpayer.  A year later, Kansas eliminated such taxes entirely, at an estimated cost at least $245 million per year when fully phased in.  South Carolina enacted a rate cut specifically for pass-through income in 2012.

  • ALEC offers states model legislation for a constitutional requirement that state legislatures approve all new taxes and fees or any increases in existing taxes and fees by two-thirds votes.  Proponents argue that supermajority requirements are designed to control spending but, in reality, they allow a small minority of legislators to hold the budget process hostage to narrow concerns and make it difficult for lawmakers to pass reasonable tax increases that have public support.

    Proponents have pushed supermajority legislation in a number of states in recent years, including Arizona, Hawaii, Idaho, Maine, Michigan, Minnesota, New Hampshire, and Texas.  In 2011, Wisconsin adopted a supermajority statute.

As our report explains, ALEC’s studies and reports claim that its agenda would boost economic growth and create jobs, but they are disconnected from a wide body of peer-reviewed academic research on public finance.  Our report outlines a better way forward for states to meet their balanced budget requirements while also creating the conditions for economic growth and a higher quality of life.