Expanding tax credit could help U.S. workers
The American working class lost a shocking amount of wealth in recent decades as wages stagnated.
Making up that lost ground will be no easy feat.
Creating more well-paying jobs would help, but that could take years. Tax cuts could mean bigger paychecks for higher earners but won’t immediately help the many working people who don’t pay federal income taxes — people in the bottom 40 percent of incomes receive more back from the federal income tax system on average than they pay in, thanks to tax credits.
Expanding those credits could make a real difference in people’s lives and return some of the income that’s been sacrificed to changing economies and technology.
Specifically, we could follow President Ronald Reagan’s lead and increase the Earned Income Tax Credit.
A quick history: The credit, created in 1975 to help lower-income workers offset Social Security taxes, was greatly expanded under Reagan, who championed it as a way to reduce poverty while making work more attractive than welfare. Because the credit is refundable, low- and moderate-income working people can get money back from the government in the form of a refund even if their tax liability is zero.
The credit continues to have broad bipartisan support.
“There’s agreement on both sides of the aisle that this (increasing the credit) is a reasonable thing to do,” said Roberton Williams, senior fellow at the Tax Policy Center.
Lawmakers understand that the credit, while helpful, has been no match for the income and wealth losses workers suffered as globalization and technology wipe out better-paying manufacturing jobs. The working class — defined as households earning between $23,300 and $40,500 in 2013 — lost more than half of its wealth between 1998 and 2013, according to Federal Reserve statistics. The whopping 52.7 percent drop in this group’s median net worth compares with a 19.1 percent drop for middle-income households and a 20.7 percent decline overall.
Working-class debt levels rose 47.9 percent during this period while their financial assets — primarily money in bank and retirement accounts — shriveled by 56 percent.
“Globalization has been a very good thing for our country economically but some people lose, and some people lose big, and it’s not their fault,” said Chuck Marr, director of federal tax policy for the Center on Budget and Policy Priorities.
Because the credit rises along with wages until reaching a plateau and phasing out, expanding it enough to restore the income of the bottom 20 percent would also replace about half the income lost by the next 20 percent of earners, Marr says. Marr offers examples of how it could work:
A single parent with one child and $16,000 in income currently pays $1,224 in payroll taxes (primarily for Social Security and Medicare) and zero federal income taxes. Under expansion, his earned income credit would increase by $3,103 to $6,476.
A married couple with two children and $32,000 in income currently pay $2,768 in income and payroll taxes. Their earned income credit would increase by $5,126 to $8,953.
A trillion dollars is a lot. But President Trump’s proposed tax cuts would reduce federal revenue by $4.4 trillion to $5.9 trillion over 10 years, according to Tax Foundation estimates.
Expanding the credit would be one way to assure that working people, and not just the well off, have a path toward creating more wealth.
Many Americans don’t trust companies or institutions — particularly the federal government and social media sites — to protect their personal information. It’s not hard to understand why. According to a recent report by the Pew Research Center, some two-thirds of Americans have fallen victim to at least one kind of data theft or fraud. That includes 41 percent with fraudulent charges on their credit cards, 35 percent who received notice about a data breach, 16 percent who had their email accounts hacked, 13 percent who had a social media account taken over and 14 percent who had someone
Some Volkswagen owners say they’re still waiting to complete their buybacks, almost four months after a judge approved a settlement for 2-liter diesel vehicles that were part of the automaker’s emissions scandal.
Many problems with the buyback program have been ironed out over the last few months, but VW owners who financed their cars through third-party lenders, such as local credit unions or banks, say they’ve experienced lags in response from the company. Lenders’ privacy concerns have slowed the paperwork process, said a lawyer for VW plaintiffs.
Jamie Caffrey, 36, used a third-party lender to get a loan for his 2014 Jetta TDI Sportwagen. He registered for the buyback over the summer and then uploaded all of his paperwork in October when the online claims filing system went live.
As part of the settlement, owners can choose to have their vehicles modified or bought back. Owners also will receive additional restitution payments of at least $5,100, and some could receive as much as $10,000. Buyback amounts are based largely on the vehicle’s pre-scandal trade-in value, with adjustments for mileage.
Caffrey, a real estate investor who lives in Hollywood, said he has waited for months to get a buyback offer. Volkswagen later contacted him to ask for additional paperwork, but when he recently called to check the status of his application, he said he was told that the document had
I understand the value of my education. Yet I get that same knot in my stomach when I see my student loan bill hit my bank account.
A recent NerdWallet survey found that three-quarters of those who borrowed money to pay for school had regrets. The most common: Not applying for more scholarships and choosing a school they couldn’t afford without taking out student loans.
How did we get here? Let’s start with the growing need to borrow. Between 1996-97 and 2016-17, the published in-state price of a public four-year college — including tuition, fees and room and board — nearly doubled, the College Board says, even accounting for inflation. States have cut funding for public colleges and universities, according to the Center on Budget try to take out a loan or credit in their name.
Ironically, despite their concerns, many people continue to be careless when it comes to their own online habits, Pew found.
For example, 41 percent of adults say they’ve shared a password to an online account with a friend or family member, while 39 percent say they use the same or a very similar password for many different accounts. And 25 percent admit to using easyto-crack passwords so they can remember them.
Pew’s findings did not come as a surprise at the American Bankers Association in Washington, D.C.
“Education is a never-ending effort,” said Doug Johnson, senior vice president of risk management been accidentally rejected and that he would have to resubmit it.
“Back in November, they assured me it wouldn’t be very long,” Caffrey said. “But what’s frustrating is the unhelpfulness.”
Elizabeth Cabraser, lead counsel for the consumer plaintiffs in the VW case and lead settlement class counsel for the 2- and 3-liter vehicle settlements, said she has seen recurring issues with third-party lenders who are leery of disclosing drivers’ loan amounts when asked by Volkswagen representatives.
“This is a unique situation,” she said. “It’s not something that for the association.
He said it was the duty of financial institutions to help customers protect their personal information.
Americans also find it challenging to safely keep track of an ever-growing list of passwords.
While cybersecurity experts generally advise using password management software as the safest way to store and keep tabs on multiple accounts, just 12 percent of internet users said they did so, Pew found. Password management programs — such as Dashlane, LastPass, Sticky Password and Password Boss — securely store and organize passwords, and can generate strong, unique passwords for each secure website that users visit. is familiar to third-party lenders, so they are understandably wary about giving (loan) payoff information. They don’t want to do anything that violates their customers’ privacy.”
Cabraser said Volkswagen has sent out letters to third-party lenders, and she has advised drivers to contact their loan providers to give them advance notice. “Once the lenders know that this is a legitimate and authorized transaction, they’ve been really responsive to get it done,” Cabraser said.
The scandal erupted in 2015 when Volkswagen admitted that it had rigged diesel-powered cars
Pew also found that large numbers of people are using risky ways to remember passwords — such as writing them on a piece of paper or saving them in a note on a computer or mobile device.
The bankers association is in favor of people using password management software.
“Clearly, it is becoming more and more difficult and inconvenient to control and remember your passwords,” Johnson said. “They need to be protected in an encrypted file.”
For anyone using a smartphone, the association recommends protecting it with technology that requires a fingerprint or password for access. “In case you lose it, no one can get into it,” Johnson said. between 2009 and 2015 with “defeat devices” to emit much fewer pollutants during emissions tests than during normal road driving.
A judge approved a $14.7 billion settlement in October that allows drivers to have their affected vehicles with 2-liter diesel engines either bought back or modified by Volkswagen.
According to the terms of the settlement, 85 percent of the vehicles must be modified or removed from the road by Volkswagen by 2018. If the automaker does not reach this goal in time, it will be required to pay a penalty, Cabraser said.