Six Reasons Why a Tax Holiday for Multinationals Is a Bad Idea

June 19, 2014 at 2:31 pm

We highlighted new Joint Committee on Taxation estimates last week that giving multinational corporations another “repatriation tax holiday” to encourage them to bring overseas profits back to the United States would cost $96 billion over the first decade (see graph).  That’s one of six reasons why the tax holiday, which some have proposed to help finance needed infrastructure spending, would be a serious mistake, our new paper explains.  The paper has the details, but in brief those six reasons are:

  1. A repatriation tax holiday would lose substantial federal revenue and swell budget deficits, so it couldn’t pay for highways, mass transit, or anything else.
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Medicaid Primary Care Payment Rate Bump Is Worth Extending

June 19, 2014 at 12:45 pm

An increase in Medicaid primary care payment rates that was included in health reform is scheduled to expire at the end of this year.  But with the need for cost-effective Medicaid primary care rising across the country, the current physician rates should be maintained — and expanded to additional providers — as the Obama Administration and a group of hospitals and doctors have recommended.

Medicaid enrollment has risen by 6 million since October, according to the Centers for Medicare and Medicaid Services, and total enrollment now tops 65 million. … Read more

House Restriction on Housing Vouchers Would Harm Low-Income Residents of Oil and Gas Boomtowns

June 19, 2014 at 8:23 am

The House adopted an amendment offered by Rep. Aaron Schock (R-IL) to limit subsidies in the Housing Choice Voucher program.  The amendment, attached to the House 2015 funding bill for the Departments of Transportation and Housing and Urban Development (HUD), would weaken state and local housing agencies’ ability to adapt to rental markets in individual communities.  Some of its worst effects would be felt in places with rapidly growing oil and gas industries, where families, elderly people, and people with disabilities could face displacement or other serious hardship. … Read more

IMF Joins Calls for Strengthening EITC and Minimum Wage

June 18, 2014 at 2:47 pm

We noted yesterday a new report by the Organisation for Economic Co-operation and Development (OECD) describes the Earned Income Tax Credit (EITC) as “effective in fighting poverty and encouraging work” and calls for expanding the EITC and lifting the federal minimum wage.  My colleague Jared Bernstein points out today that the International Monetary Fund (IMF) has just made a nearly identical recommendation.

In its latest look at the U.S. economy, the IMF says that strengthening the EITC and the federal minimum wage would aid the recovery and improve the nation’s long-term economic outlook:

An expansion of the Earned Income Tax Credit — to apply to households without children, to older workers, and to low income youth — would be another effective tool to raise living standards for the very poor.  

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Congress Should End, Not Extend, Prohibition on Taxing Internet Access

June 18, 2014 at 11:13 am

The House Judiciary Committee will likely approve a bill today to make permanent the Internet Tax Freedom Act (ITFA), which bans discriminatory and multiple taxation of Internet purchases and imposes a moratorium on new state and local taxes on Internet access services.  Rather than make ITFA permanent, Congress should extend its ban on discriminatory and multiple taxes for a few years but allow its prohibition on taxing Internet access to lapse.

That prohibition denies states and localities billions of dollars in potential revenues each year — money that could help undo cuts in education, libraries, and other critical services made due to the Great Recession. … Read more

Congress Must Resist Lobbyists’ Efforts to Undercut Nutrition Reforms

June 17, 2014 at 4:36 pm

The Senate today will begin considering its annual Agriculture Department funding bill, which covers the child nutrition programs.  The bill already includes measures promoted by industry lobbyists that would undercut reforms designed to improve children’s nutrition and combat childhood obesity.  Senators must reject any amendments that would further weaken reforms, as we explain in an updated commentary.

Child obesity has more than doubled in the past 30 years and poses a serious health threat.  Recently, we have made some progress. … Read more

OECD Calls for Strengthening EITC and Minimum Wage

June 17, 2014 at 1:47 pm

The Earned Income Tax Credit (EITC) “has been effective in fighting poverty and encouraging work,” the Organisation for Economic Co-operation and Development’s (OECD) new Economic Survey of the United States finds.  The report recommends expanding the EITC to reach those largely left out — and lifting the federal minimum wage to make such an expansion more effective.  These are timely messages, given that proposals before Congress would accomplish both goals.

The EITC “encourages low-income parents to take up work by lowering their tax rate and by providing a financial bonus for their work,” the OECD explains, noting that the research shows any negative effect on employment from the credit’s gradual phaseout at higher income levels is limited.  … Read more

Update: Where Things Stand for the Unemployed

June 17, 2014 at 12:47 pm

Emergency federal jobless benefits expired in December, and the Senate-passed extension, which only provides benefits retroactively through May 31, continues to languish in the House.  This means that only regular state UI benefits — 26 weeks, in most states — are available to qualifying workers who lose their jobs through no fault of their own.  We’ve updated our backgrounder on the weeks of UI available in each state to reflect where things stand for the unemployed across the country.

This map and table show the number of weeks available in each state, along with the state’s three-month average unemployment rate.  … Read more

New Data Provide Sobering Look at Concentrated Poverty in Schools

June 16, 2014 at 11:25 am

Update, June 20: We’ve updated the graph, below, to correct an error in the display of data.

New data never before systematically collected and reported show that thousands of schools across the country have very high concentrations of poor students.  States provided the data as part of the new community eligibility provision of the school lunch and breakfast programs, which allows schools serving high-poverty areas to simplify their school meal programs and serve meals at no charge to all students.  The data show how important community eligibility is.… Read more

In Case You Missed It…

June 13, 2014 at 2:28 pm

This week on Off the Charts, we focused on the safety net, state budgets and taxes, federal taxes, and child nutrition.

  • On the safety net, we excerpted Jared Bernstein’s New York Times Upshot blog post on nine things you might not know about minimum-wage workers.  Barbara Sard highlighted a Senate appropriations bill that expands the reach of the Department of Housing and Urban Development’s effective but underutilized Family Self-Sufficiency program.  Brynne Keith-Jennings highlighted our updated trio of SNAP resources. 
  • On state budgets and taxes, Michael Mitchell described new tax changes in the District of Columbia that demonstrate how to cut taxes responsibly. 
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Community Eligibility: Spreading the Word About an Important Hunger-Fighting Tool

June 13, 2014 at 12:26 pm

Community eligibility, a provision of the Healthy, Hunger-Free Kids Act of 2010, will allow more than 28,000 schools in high-poverty neighborhoods to offer nutritious meals to all students at no charge next year, as we’ve explained.  Schools must opt in to take advantage of this important anti-hunger initiative — which underscores the need to spread the word about its success so far.

Community eligibility has been phased in over the last three years.  About 4,000 schools in 600 school districts in low-income communities across 11 states already offer community eligibility, and it has led to a striking increase in the number of children in high-poverty areas eating school breakfast and lunch. … Read more

What Does Kansas’ Botched Tax-Cut Experiment Portend for Other States?

June 12, 2014 at 3:06 pm

The budgetary disaster emerging from Kansas’ radical tax-cutting experiment is making pro-tax-cut elected officials in other states uneasy.  The Wall Street Journal reports this week that leaders in Oklahoma, Nebraska, and other states are expressing concern about the Kansas results and distancing themselves — at least rhetorically — from the Kansas failures.  Despite their rhetorical backtracking, however, the tax cuts that policymakers in Ohio, Oklahoma, North Carolina, Wisconsin, and other states are pursuing aren’t all that different from the Kansas plan. … Read more