The Avenue

Congressional Deadlock Threatens Other Tax Measures Too

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Friday’s unemployment report revealed that October brought more of the same for the nation’s workforce.  The typical unemployed worker has been out of a job for about 20 weeks, and almost 42 percent of the unemployed have been out of work for 27 weeks or more. Those figures are virtually unchangedfrom six months ago--just like the unemployment rate, which held steady at 9.6 percent.

These workers, along with others who have seen their paychecks and hours cut, are struggling to get by with less in a slow-to-recover economy.

Meanwhile, the renewal of stimulus (ARRA) tax provisions in Congress could be the buffer that keeps many working families from falling into poverty in the after-shock of the Great Recession. These tax provisions target increased assistance to low income workers, their families and communities, through expansions to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Indeed, the tax code provides some of the most effective means of targeting communities in an economic downturn, as was found to be the case after the 2001 recession.

However, if Congress fails to act on proposals to make the ARRA expansions permanent, they will expire in 2011, and reduce support for working families at a critical time. If that happens, 8.9 million working families with children will lose part or all of their CTC, while married families with three or more children could see their EITC decline by more than $1,000.  Metro areas hit hardest by the downturn--particularly Sun Belt metro areas like Las Vegas, Cape Coral, Riverside, and Phoenix--stand to lose the most if these expansions aren’t made permanent.

These provisions are even more important now than when they were initially passed, in February of 2009, when unemployment was 8.2 percent and climbing. Since then, we have seen poverty continue to rise in response to high unemployment. And per my colleagues’ most recent estimates, even if the pace of employment continues, the nation will not return to pre-recession employment until late 2012. But let’s not think about another election season quite yet….

November 2has come and gone. High and sustained unemployment (in most places) has not.  And that means that Congress has to get to work for working families.

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