In his 2011 State of the Union Address, President Obama invoked “our Sputnik moment.” Recalling U.S. investments in research and education after Russia launched the first space satellite half a century ago, the President called for renewed efforts to meet international competition with investments in education and research, renewable energy, biomedical science and information technologies. Obama’s call to action still matters. (more…)
Over the past two decades, a wage subsidy operating through the tax system called the Earned Income Tax Credit has developed into America’s biggest program specifically dedicated to lifting low-income citizens out of poverty. Many Republicans as well as Democrats support this tax subsidy, which goes to people who work for modest wages. The extra money helps to reduce deprivation among poor families with children—something liberals very much want to do—yet it is the opposite of the sort of no-strings-attached “handout” that conservatives often decry.
As a tool to reduce poverty, the Earned Income Tax credit has a lot going for it. But it also has important limitations. The credit can be improved, and other programs are needed to help poor people find and hold jobs. (more…)
Image by Ken Teegardin via Flickr
“Almost half of all Americans pay no taxes!” That’s the claim bandied about in elections and overheated television talk-fests. It refers only to federal income taxes, from which various groups are exempt. But many other taxes are also collected at the federal, state, and local levels. When all kinds of taxes are added up, almost all Americans pay substantial amounts. In fact, poor and middle-income people frequently fork over higher shares of their incomes than the very rich.
The U.S. federal government relies on two big taxes collected from large numbers of Americans: the federal income tax and payroll taxes regularly deducted from wages and salaries to cover Social Security and Medicare benefits. Income and payroll taxes each contribute about 40% of federal revenues. Almost half of U.S. households currently do not owe federal income taxes, but over three-fifths of these “non-filers” are workers who contribute very substantial payroll taxes. For example, Americans making the lowest incomes pay nearly 9% of their wages in payroll taxes, about the same percentage as middle-income workers pay.
Only about 17% of American households pay neither income nor payroll taxes, because they are headed by people in special sub-groups:
Occupy Wall Street has put a public face on the backlash against growing inequality. As most Americans struggle to make ends meet, income and wealth at the very top continue to burgeon, in bad times as well as good. Although rag-tag protesters have been vilified, protests against the widest economic disparities in more than a century resonate with the wider public. For some time, the best research has documented shared American worries about inequality and broad support for steps to enhance opportunity. (more…)
Not long ago, the U.S. Census Bureau delivered very bad news about poverty in the United States. In 2010, 15.1% of Americans had incomes below the poverty line—set at $22,113 for a family of four—and the poverty rate for 2011 will be even higher. For older people who remember that poverty fell to 11.1% back in 1973, it may seem puzzling that things have gotten so much worse. Rising poverty is not a recent development either. Things were getting worse well before the Great Recession of December 2007 through June 2009. Given the way the U.S. economy works in our era, sluggish growth, high levels of joblessness, and persistently high poverty are likely to persist for years—unless our political leaders change course and do more to help the poor and near-poor. (more…)
The outcomes of the elections held on November 6, 2012 will have a big impact on students and other young Americans. The presidential candidates and their parties have taken sharply different stands on college costs, job opportunities, health care, social issues, voting rights, and investments in the nation’s future – all issues of special relevance to young people.
Since 1985, the price of a college degree has risen at more than twice the rate of inflation. Americans now owe more for student loans than for credit card debt. In response, President Obama increased Pell grants, simplified student aid applications, made it easier for ex-students to repay loans, and ended unnecessary subsidies to banks. The Obama administration has also moved to help students get accurate information on the costs and benefits of various colleges and universities. (more…)
“We have a unique opportunity to sweep and remake the political landscape,” declared Congressman Paul Ryan, chair of the House Budget Committee, to a gathering of Republican faithful and Tea Party activists. The audience laughed and cheered as Ryan promised to lead a crusade to revamp U.S. taxes and domestic programs. Backed by almost all of his Republican Congressional colleagues, Ryan’s radical budget plan would:
Republicans in the House of Representatives are pushing a radical overhaul of the federal budget designed by Representative Paul Ryan of Wisconsin—a plan to make huge cuts in vital U.S. safety net programs to pay for big new tax cuts for the very wealthy. Intense controversy already surrounds Ryan’s proposal to replace Medicare with a system of vouchers of steadily reduced value, forcing all senior citizens to pay more for their health care. But another part of the Ryan budget is equally extreme, because sixty percent of is cuts over the next decade would come from safety-net programs for highly vulnerable low-income Americans.
A whopping $3.3 trillion would be slashed from programs aiding people with incomes below or just above the poverty line (set at $22,113 a year for a family of four in 2010). Each year, more than $300 billion would be slashed, leaving the safety net torn asunder. (more…)
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