White House Outlines Tax Benefits For Blacks

By: Hazel Trice Edney

WASHINGTON  - Despite opposition from Black economic leaders and members of the Congressional Black Caucus, who said his tax compromise bill did not go far enough for the poor, President Obama won a relatively easy battle pushing it through the House and Senate last week. He has now signed the bill that includes tax breaks for both wealthy and middle- class Americans and a renewal of unemployment benefits - a package that the White House has described as a "major win for African-American families."
The political opposition from Democrats was largely due to the fact that billions of dollars in tax breaks will be returned to wealthy Americans that could be applied to programs to help the poor, historically disadvantaged and underserved communities such as African Americans. Obama had repeatedly promised to repeal these tax breaks instated by President Bush. But, due to political pressure from Republicans who promised to block any bill without the Bush tax breaks, President Obama said he had no choice but to compromise.

At Christmas this week, 15.8 percent adult African Americans are unemployed, more than twice the rate of whites and consistently well above the national average of 9.8 percent. With these stats in consideration, the Obama Administration compiled a list of major benefits of the bill, titled "The Tax Relief, Unemployment Insurance Reauth­orization, and Job Creation Act of 2010," to African Americans. It was signed into law on Dec. 17.

Among specific benefits to Black families outlined in an email from the White House are:

• An estimated 2.2 million African-American families will benefit from the expansion in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that are extended in the agreement. These credits help roughly 4.7 million African-American children or almost half (44 percent) of all African-American children. For example, an African-American mother with three children making $20,000 will receive. This family will also receive a $400 tax cut from the new payroll tax cut and a total tax benefit of $2,500 next year.

• The extension of Unemploy­ment Insurance will benefit 1.1 million African Americans. That is why the National Congress of Black Women praised the President for giving the unemployed a "new lease on life" and a "survival line" through the next 13 months.

• The unemployment rate among African-Americans was 16 percent in November 2010. It has increased seven percentage points since the beginning of the recession in December 2007. Young African-Americans face extremely high unemployment rates, with 28 percent of those ages 16 to 24 in unemployment in November 2010. African Americans also face longer durations of unemployment. For example, 47 percent of unemployed African Americans have been unemployed for 27 weeks or more, compared to 43.8 percent for all unemployed (not seasonally adjusted). The median African- American unemployed worker has been unemployed for almost a month longer than the median unemployed worker. To help remedy the economic suffering, the Obama tax plan secures an extension of unemployment insurance for an additional 13 months. Without this extension, 330,600 African Americans looking for work would have lost their benefits this month alone, and through the end of next year over 1.1 million unemployed African Americans would have lost their benefits.

• About 4.1 million African-American children will benefit from an expanded Earned Income Tax Credit. Without this agreement, their families could lose up to $1,040.

• The extension of the Child Tax Credit - help for low- and moderate-income families with children - with a $3,000 minimum threshold in the agreement will benefit 2.7 million African-American children.

• For many families, extending the minimum threshold in the CTC will result in thousands of dollars in additional tax benefits that would have otherwise been lost. For example, a single mother with two children making $17,000 will receive $2,000 in child tax credits compared to about $640 if only the 2001/2003 tax cuts were extended - an increase of about $1,360.

• According to a study released last year by the Center on Budget and Policy Priorities, seven policies included in the Recovery Act have kept 1.4 million African-Americans above the poverty line. Three of these policies are continued in the current bill, including Unemployment Insurance, the EITC and the Child Tax Credit.

• High impact job creation measures. The bill includes some of the best measures for jumpstarting growth and job creation, including a full year of emergency unemployment insurance benefits, a two percent payroll tax cut for working families, and a continuation of tax credits for working families. This is on top of growth generated by extension of the middle-class income tax rates. Without action, unemployment benefits for at least two million Americans would disappear this month alone with millions more in jeopardy in the weeks ahead.

Despite the significants benefits, the compromise remained sour to many Democrats and Black leaders who thought the President simply sacrificed too much in allowing billions of dollars in tax cuts for the wealthy.

"There's no excuse for a package that rewards billionaires who've done little to create jobs at the expense of working-class families who are struggling to get by," wrote National Urban League President & CEO Marc Morial in his weekly "To Be Equal" column.

Morial said the president's package fell short when it failed to extend unemployment benefits "for two years instead of 13 months, the same period as the extension of the Bush tax cuts."

He adds, "Congress also should increase the tax cuts for those making under $250,000, because those cuts will increase consumer demand which is a driver of job creation," Morial said.

Morial said the plan should include a full two-year payroll tax holiday, instead of one year, in order to stimulate consumer demand and it should include an "immediate vote on the Debt Ceiling, which is the only way to finance the plan."

Morial concluded: "To do otherwise would be more hocus-pocus economics."