Jun 24, 2019

An expert in policy advocacy and coalition building, Chaer has dedicated her career to helping people meet their basic needs and expanding economic opportunity. She serves on the executive committee of the All Families Deserve a Chance (AFDC) coalition. Staff page ›

Recent articles

CCLP’s 2024 legislative wrap-up, part 2

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs. Part 2/2.

CCLP’s 2024 legislative wrap-up, part 1

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs.

CCLP testifies in support of Clean Slate updates

Bethany Pray, CCLP’s Chief Legal and Policy Officer, provided testimony in support of House Bill 24-1133, Criminal Record Sealing & Expungement Changes. CCLP is in support of HB24-1133, as it is one of our priority bills.

Support tax policies that help the rest of us

by | Jun 24, 2019

To make a big difference on financial security to families with low or middling wages — for better and worse — let’s talk taxes.

The last overhaul of the federal tax code occurred not long ago. Approved by Congress in 2017, the Tax Cuts and Jobs Act (TCJA) had a big effect on taxpayers all along the economic spectrum, but largely benefited those in the top tier. Case in point: While the bottom 80 percent of workers received a tax cut of about $795 a year, the biggest (and permanent) cuts were reserved for corporations who saw their tax rate cut from 35 percent to 21 percent. This reduced corporate tax revenue to the U.S. by 40 percent, and accounted for $1 trillion of the $1.5 trillion cost of the bill. In total, 51 percent of the income gains from the legislation went to the wealthiest 5 percent of Americans. The legislation provided some tax relief for Americans by reducing tax rates, doubling standard deductions and increasing the Child Tax Credit.

When policymakers think of meeting the needs of the middle class, businesses or the wealthy, they think in terms of tax incentives and tax policy changes. For people who are struggling to make ends meet, the discussion generally centers on programs. For example, to help the middle class and wealthier individuals meet their needs, the U.S. offers the Home Mortgage Interest Deduction. For low-income Americans, the U.S. provides Housing Choice Vouchers for one out of four eligible applicants. The middle class and wealthier get tax breaks on their 529 College Saving Accounts, while poorer students can apply for Pell Grants.

In 2018, CCLP, together with United for a New Economy and Colorado People’s Alliance, and in consultation with the national Economic Security Project, developed a proposed ballot measure to re-craft Colorado’s income tax code. The proposed measure would have replaced our flat income tax of 4.63 percent with a more progressive structure; a Working Families Tax Credit.

The WFTC would have been funded with higher marginal tax rate on Coloradans earning more than $500,000 per year. According to the Who Pays report from the Institute on Taxation and Economic Policy, the bottom 20 percent of earners would have seen the share of their income they pay towards state and local taxes drop from 8.7 percent to 3.7 percent, while the top 1 percent of earners (who currently provide the smallest share of their income towards taxes) would see their share of income going towards taxes increase from 6.5 percent to 8.8 percent. More than half of Coloradans (those earning less than $70,000) would have seen some benefit, including working individuals without children, parents, low-income independent college students, and caregivers for small children and older relatives. In all, 2.7 million Coloradans would receive a benefit, compared to the 340,000 Colorado households who currently receive the state’s Earned Income Tax Credit.  Learn more in this analysis. Given our late start, and because of a competing ballot measure, we decided to not move forward with the initiative.

Bold new ideas
Meanwhile, a number of presidential candidates have put some bold ideas on the table, including several proposals to use the tax code to reduce inequality, lift families out of poverty, and address rising costs and income stagnation. While none of these bills has a chance to pass through a divided Congress, they may inform the policy discussion for leveling the playing field for people with low- to middling incomes in the months leading to the election and the years to come.

  • Kamala Harris has proposed the Lift Act, which would be structured like our proposed Working Family Tax Credit but provide a $3,000 year refundable tax credit for individuals ($6,000 for couples). It would build upon the EITC to provide more benefit to individuals without children, caregivers, independent college students, etc. It would be paid for in part by rolling back much of the TCJA.
  • Cory Booker has introduced the Rise Act to double the income eligibility ceiling on the EITC, expand coverage to caregivers and low-income college students, and reduce the age of eligibility for single adults from the current 25 to age 18. If approved, it would provide up to $4,000 a year for an individual (or $8,000 per year for a couple). The proposal would cover 154 million Americans and lift 15 million people out of poverty. Senator Booker has also proposed legislation to increase the estate tax and tax rate on capital gains to fund Child Savings Accounts.
  • Businessman and presidential contender Andrew Yang has proposed a universal basic income of $1,000 per month to all Americans, paid for with a new value-added tax (consumption tax levied on products or services), to reduce inequality, supplement wages and enable people to meet their basic needs.
  • Colorado Sen. Michael Bennet has proposed the Working Families Tax Relief Act, which would lift 7 million people out of poverty. It would make the federal Child Tax Credit fully refundable- so that families in poverty would get the same $2,000 for a child that wealthier families do under the TCJA. It would provide an extra $1,000 per year for those with a child under 6, since families with the youngest children are the most likely to struggle to meet basic needs. It would increase the current EITC by 25 percent. It would dramatically expand the EITC for workers without minor children at home, and expand the age of eligibility from the current 25-64 to 19-67.
  • Bernie Sanders has proposed increasing the Estate Tax to 45 percent on estates over $3.5 million and 77 percent on estate over $10 million. Meanwhile, Sen. Elizabeth Warren has proposed a tax of 2 percent on wealth over $50 million and a 3 percent tax on wealth over $1 billion. In both of these proposals, extra revenue created would fund programs.

Tax policy changes are high-stakes, as our elected officials, and by extension, our voters decide whether and how this powerful tool is used. Who should get tax relief? Who should pay more? Which tax cuts should be permanent? Which credits or deductions, or changes in tax rates should expire? At a federal level, should we allow tax cuts to increase the deficits, or should previous tax cuts be reversed to pay for different tax reductions? What is the value of more cash to individuals? What is the value of services and programs we would want the government to provide?

What’s happening in Colorado
At CCLP, we prioritize state-level policy. We have worked to create and make permanent our current state EITC. We have worked with Colorado Fiscal Institute and Colorado Children’s Campaign to create a refundable Child Care Tax Credit for families earning under $25,000, which passed with bipartisan support. We supported the unsuccessful effort to start paying Colorado Child Tax Credit this year. We have opposed efforts to reduce the state income tax rate further. That would lower revenues for essential state services and benefit most the wealthiest Coloradoans and provide no benefit to those with incomes too low to pay state income tax.

Our proposal for a Working Families Tax Credit functions as a blueprint for how the tax code can be restructured to reward work and supplement low wages, recognize the unpaid work of caregiving, and finishing one’s education. Whether at the legislature or the ballot box, CCLP will fight to ensure that any proposed changes in tax policy will benefit struggling Coloradoans.

– By Chaer Robert

Recent articles

CCLP’s 2024 legislative wrap-up, part 2

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs. Part 2/2.

CCLP’s 2024 legislative wrap-up, part 1

CCLP's 2024 legislative wrap-up focused on expanding access to justice, removing administrative burden, supporting progressive tax and wage policies, preserving affordable communities, and reducing health care costs.

CCLP testifies in support of Clean Slate updates

Bethany Pray, CCLP’s Chief Legal and Policy Officer, provided testimony in support of House Bill 24-1133, Criminal Record Sealing & Expungement Changes. CCLP is in support of HB24-1133, as it is one of our priority bills.

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.