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Agenda - 12-04-1995 - Early - Special Work Session
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Agenda - 12-04-1995 - Work Session on Welfare - Early
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Agenda - 12-04-1995 - Early - Special Work Session
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BOCC
Date
12/4/1995
Meeting Type
Special Meeting
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Agenda
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Minutes - 19951204
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\Board of County Commissioners\Minutes - Approved\1990's\1995
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What Does This Mean? <br /> This analysis indicates that the Cato study has some significant flaws and that low- <br /> income workers in North Carolina are better off than AFDC recipients in terms of <br /> benefits versus income. It does not mean, however, that working for a living guarantees <br /> a living wage. The Census Bureau reported that over 4.2 million"families had at least <br /> one full-time worker for more than half the year and still lived below the poverty line.full-time <br /> Moreover, many studies have shown that the difference between the full-time working <br /> poor and AFDC families with no income is quite small. The GAO testified in January <br /> that working poor families were still earning below the poverty line and that working <br /> 5 <br /> poor families on average earned about $160 more per month than an AFDC family. <br /> Other researchers have pointed out that more work does not always end up in a greatly <br /> improved situation for the working poor versus nonworkers, mainly due to the patchwork <br /> of eligibility rules and cutoffs from human services programs. <br /> The Cato study concludes that "these goals [of reducing welfare dependency, <br /> discouraging illegitimacy and rewarding work] can be accomplished only by cutting <br /> benefit levels substantially"6 Cutting benefits, however, does not address the central <br /> realities of working for a living in North Carolina: low wages and lack of access to <br /> quality health and child care. <br /> NYIy ' <br /> What Actions Are Policymakers Taking to Make Work Pay? <br /> There are two major ways government can make work pay: provide tax relief for low- <br /> income earners; or provide programs to supplement low-income wages or offset costs of <br /> working, such as child care. <br /> Tax Policies <br /> The Federal government has been active in providing tax relief for low-income earners. <br /> The Earned Income Tax Credit (EITC) has been a principal policy tool for the Federal <br /> government to offset increases in payroll and excise taxes for low-income workers, with <br /> three major expansions in the EITC in the last decade. As shown in the example above, <br /> the EITC provides over $1.20 an hour in after-tax benefits to the low-income working <br /> family, which accounts for most of the difference between workers and those entirely <br /> dependent on welfare. However, this policy may soon change as both houses of Congress <br /> have passed measures to curtail the EITC for many working poor families. <br /> By any measure, North Carolina enacted one of the largest tax cuts in the nation in 1995. <br /> The changes in the individual income tax will eliminate income tax liability entirely for <br /> many low-income earners. For instance, the cutoff for income tax liability for a family of <br /> three will increase from $10,400 to $13,900 and for a family of four (with two adults) <br /> from $13,000 to $17,000. These measures help alleviate some of the tax burden for low- <br /> income families. However, there was no action taken to reduce the sales or property tax <br />
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