Despite strong rhetoric from policymakers and candidates about the importance of a high-quality education for all children, deep disparities persist in educational opportunities for Michigan children based on income, race and geography. The lack of equity in education has wide repercussions for Michigan’s economy and next generation.
Educational disparities do not occur in a vacuum and can be traced to public policies that limit employment and housing options for many parents, place children in schools without the resources to meet their needs, and often create insurmountable barriers to the American dream of a better life for our children and grandchildren.
Georgia is missing out on a time-tested tool that helps hardworking families, boosts small businesses and strengthens local economies. Twenty-six states and the District of Columbia give a critical boost to families that work but struggle to make ends meet through a state Earned Income Tax Credit (EITC). For full details on the case for enacting a state EITC in Georgia, see A Bottom-Up Tax Cut to Build Georgia’s Middle Class.
Enacting a state EITC, or Georgia Work Credit, would be an ambitious investment in more than 1 million families striving to break the cycle of poverty and ascend the economic ladder. As with any other public investment, it carries a cost in lost state revenue. That cost depends on two factors. First, the size of Georgia’s state match. Most state EITCs are set at a percentage of the federal credit, ranging from a low of 3.5 percent in Louisiana to a high of 40 percent in Washington, D.C. Second, lawmakers can choose whether a Georgia EITC is refundable or non-refundable. In all but three states with an EITC, lawmakers chose the refundable option to let working families keep the full value of the credit even if it exceeds their state income taxes.
This November, Maine voters will consider a ballot initiative (Question 2) that rolls back recent tax breaks for the wealthy and dedicates this revenue toward additional state level resources for schools. The Maine Center for Economic Policy (MECEP) examined the context for this initiative, its potential to promote tax fairness, and its capacity to improve educational outcomes and workforce readiness of Maine
Tens of millions of dollars in recent tax breaks compromise state capacity to invest in education. As a result of income tax cuts since 2011 that largely benefit wealthy households, Mainers will lose $297 million in state revenue in 2017 that would have been available for education funding. As the state’s contribution to education has decreased, local costs have increased—an average of $180 million a year. Shortchanging schools at the state level has a wide range of negative consequences for Maine students, businesses, and communities including: widening of the opportunity gap between students in high- and low-income communities; putting education quality at risk; hurting employers who struggle to find workers with skills their businesses need; compromising the fairness of Maine’s tax system; and making it harder for communities to thrive.
Repeated cuts to the state income tax made since the mid-2000s are one of the most significant reasons for an ongoing financial crisis that is eroding important public services and threatening Oklahoma’s economic well-being.
Acute teacher shortages, college tuition and fee hikes, critically understaffed correctional facilities, longer waiting lists for services, and lower reimbursement rates for medical and social service providers are among the harmful consequences of chronic budget shortfalls.
Beginning with the Great Recession that reached Oklahoma in 2009, the state has experienced a continuing budget crisis. Even after the economy recovered from a severe national recession, Oklahoma’s funding for core services remains well below pre-recession levels. Many state agencies still operate with one-quarter to one-third less state support compared to fiscal year 2009. Overall, this year’s state appropriated budget is $896 million, or 11.4 percent, below that of 2009 once adjusted for inflation.
Numerous factors contribute to the growing gap between the cost of maintaining core services and the revenue Oklahoma collects to pay for them. These include erosion of the tax base through the growth of online commerce and the shift to a service-based economy, the ballooning number and cost of tax incentives, and an increasing share of tax dollars that are allocated off-the-top for specified purposes, leaving less revenue for general appropriations.2 While these other factors contribute to budget shortfalls, the series of cuts to the state income tax that have reached an annual cost of more than $1 billion in lost revenue cannot be overstated as a cause.