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The Boss Man Cometh: Through State Tax Breaks, Employers Pilfer Workers’ Earnings

6:46 pm in Uncategorized by Michelle Chen

Cross-posted from In These Times.

As you file your taxes this week, before complaining about how much you’re forking over to Uncle Sam, bear in mind that the tax man might not be the only one you’re writing a check to: Your boss might be getting a big cut, too.

Thanks to arcane state tax subsidies, thousands of companies have fattened their profit margins by poaching from workers’ paychecks. According to a report by the watchdog group Good Jobs First, nearly $700 million in taxpayer money is being siphoned off by corporations annually through clever deals with state governments that are supposedly aimed at “job creation.”

According to the report, the tax breaks allow companies to effectively skim money from workers’ state income tax withholdings “to provide lavish subsidies to corporations rather than paying for vital public services.” The beneficiaries include “more than 2,700 companies, including major firms such as Sears, Goldman Sachs and General Electric.”

These programs feature glowingly euphemistic names: Indiana’s Economic Development for a Growing Economy (EDGE) Tax Credit, the Mississippi Advantage Jobs Incentive Program, and, to emphasize that these aren’t just any old jobs we’re talking about, New Mexico’s High Wage Jobs Tax Credit. Read the rest of this entry →

Children of Immigrants Targeted by Tax Warfare in Congress

6:43 am in Uncategorized by Michelle Chen

Evan Finn / Creative Commons

The fundamental injustice of the tax system grows clearer as tax day looms ominously over working people and a few horde more and more of the nation’s wealth. Short of a total collapse of capitalism, the primary redistributive remedy for this would be progressive taxation. But our tax policy gets it exactly backward, and it’s about to get a bit worse. And as with so many wars of attrition against the working class, this one begins by shafting disenfranchised communities, especially immigrants.

While the rich are rolling in tax giveaways, a few credits actually give poor folks a break. One of these, the refundable child tax credit (CTC), applies to middle-class and poor parents alike and was claimed by some 21 million taxpayers in 2011, “which averaged about $676 per child and totaled $26.1 billion,” according to Politico. For poor families, the CTC, together with its big sister the Earned Income Tax Credit, provides a lifeline to keep them from plunging below the poverty line.

Now some lawmakers advocate cutting off the child tax credit for tax filers who lack of Social Security number. The move is unabashedly aimed at making life harder for undocumented workers, even taxpaying ones, specifically by punishing their children.

Currently, the CTC is one federal tax benefit that people can claim using an Individual Tax Identification Number (ITIN) instead of a social security number. This effectively makes it available to undocumented workers—those who lack formal authorization.

The debate centers on whether children of undocumented workers, who are in many cases U.S.-born, should have the same modest benefits afforded to other working families. According to the First Focus Campaign for Children, the policy “could raise taxes on the families of more than 5.5 million children, including 4.5 million of whom are U.S. citizens.” Children of immigrants are disproportionately Latino and poor, with an estimated two in five poor children growing up in the Latino community.

In addition to being cruel toward immigrant families in general, the proposal is inlaid with the pernicious stereotypes of children of undocumented immigrants, who have been demonized as “anchor babies.” In fact, the canard of immigrant hordes procreating in hopes of using US-born kids as a springboard toward legalization is a myth peddled by anti-immigrant groups to stoke Malthusian demographic panic. But hey, an election year means open season on immigrants and endless bloviating about securing the border. Undocumented workers and other immigrants who cannot vote (despite being breadwinners and taxpayers for their families) can only watch as xenophobic spew greases the campaign trail. Read the rest of this entry →