Gotham Gazette http://www.gothamgazette.com/component/tags/tag/729 Thu, 14 Dec 2017 04:08:08 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Comptroller Pushes for Expansion of Tax Refund for Working New Yorkers http://www.gothamgazette.com/?id=6750:comptroller-pushes-for-expansion-of-tax-refund-for-working-new-yorkers http://www.gothamgazette.com/?id=6750:comptroller-pushes-for-expansion-of-tax-refund-for-working-new-yorkers stringer at city hall rally

 Comptroller Scott Stringer (photo: @scottmstringer)


In his testimony before the New York State Legislature last week on the state’s proposed budget for 2018, New York City Comptroller Scott Stringer called for the expansion of a tax credit that could potentially pull thousands of New York City residents out of poverty, continuing a push he began last year when he first floated the idea.

The centerpiece of Stringer’s proposal is to triple the city’s Earned Income Tax Credit (EITC), a refundable tax benefit aimed at working families that functions on federal, state and city levels. The credit, which incentivizes employment, grants individuals and couples who qualify anywhere between several hundred and a few thousand dollars, depending on the number of children they have. New York state matches up to 30 percent of the federal EITC and the city matches another 5 percent. Stringer’s proposal would see the city’s contribution increase to 15 percent. It would require state lawmakers to authorize the city to expand its tax credit and would need the City Council to pass legislation, and it would have to be funded in the city budget.

“Tripling the City’s earned income tax credit puts money in the pockets of those who need it most,” said Stringer, in a statement to Gotham Gazette, noting that one-fifth of New Yorkers live below the poverty line. “It’s one of the most effective anti-poverty programs in America, and an expansion would have extraordinary benefits across the five boroughs. It would stimulate our economy, boost small businesses, and support local communities. Most importantly, it’s the right thing to do at a time when so many working families are struggling to make ends meet.”

The federal EITC, based on a household’s total earnings, gives up to $6,269 to a couple with three or more children making a maximum of $53,505 in a year. An individual without children making a maximum of $14,880 can receive up to $506 in a tax refund. The federal credit along with the state and city’s contribution combine for a significant benefit -- a maximum of $8,463 for qualifying New York City residents -- that can inject money back into the pockets of low- to moderate-income New Yorkers and spur spending.

Studies have found that the credit is highly effective at raising employment rates for single parents and that families with children typically use the credit to pay for things like home repair, maintenance on vehicles that are used to commute to work, and in some cases, to continue their education. This success has made the tax credit popular for conservatives and liberals, alike.

The comptroller first released his proposal, accompanied by a detailed report, in September last year at an Association for a Better New York breakfast event. The report projects that tripling the city’s contribution could lift 15,000 families above the poverty line. The average credit for an individual who qualifies would increase from $110 to $330, and for about 6000 New Yorkers, it would effectively nullify their city income tax burden. The proposal would cost the city between $210 to $220 million, spending which is likely to go back into the city economy. According to the comptroller’s office, roughly 950,000 New Yorkers qualified for the EITC last year, receiving about $2.8 billion in tax refunds. That translates to about 150,000 families that escaped poverty levels.

One setback with the credit is that many New Yorkers do not realize that they qualify for it. Under Mayor Bill de Blasio, a progressive Democrat, the city has recognized the strength of the EITC program. In 2015, the Department of Consumer Affairs (DCA) launched a media blitz to promote the tax credit, including ads in the subways, on bus shelters, in print, radio and online. That ad campaign has become a staple in promoting the city’s free tax preparation program. According to estimates by Civis Analytics, a data analytics firm that helped the city with its “Start By Asking” benefits awareness campaign, of the 1.1 million New York City residents that qualify for EITC, approximately 120,000 of them do not claim the credit, which is the city’s current concern. DCA spokesperson Abigail Lootens, in an email, said the agency is closely reviewing the comptroller’s EITC proposition. “We are also dedicated to reaching those who are currently eligible but not claiming this vital credit,” she said.

At the state level, Stringer has found an ally in Senator Jose Serrano, a Democrat whose district includes the South Bronx and parts of East Harlem, low- and middle-income communities for which the EITC is a boon. Serrano introduced a bill in the current legislative session based on Stringer’s proposal, to allow New York City to expand its EITC contribution. The senator stressed that expanding EITC is an “organic approach” to reducing poverty. “While it does require a financial commitment by the city, a vast majority of that money goes right back into the community,” he said in a phone interview.

Serrano’s bill is currently before the Senate’s Cities Committee, where he hopes it’ll receive the necessary support. The committee is chaired by Sen. Simcha Felder, a Democrat who caucuses with the Republican majority. A spokesperson for the governor’s office said the proposal would be reviewed.

“It is really such a timely bill,” Serrano said. “Over the last few years, the rich have gotten richer and the poor have gotten poorer. This will help bridge that gap a little and help people get above the poverty line.”

Ron Deutsch, executive director of the nonpartisan Fiscal Policy Institute, said both the city and state should increase their EITC contributions “to help bolster low-income family earnings and help boost them out of poverty.” Aside from Serrano’s bill, there are multiple proposals before the state Legislature that enhance the EITC in some shape or form, including a bill sponsored by Assemblymember Robin Schimminger, an upstate Democrat. Schimminger’s bill, which increases the state’s EITC from 30 to 35 percent of the federal EITC, has been introduced in three previous legislative sessions but has never made it beyond the Ways and Means committee. Schimminger’s office did not return a request for comment by publishing time.

“This is one of those bipartisan issues where there’s agreement,” Deutsch said. “In terms of why it doesn’t get done, I think it’s always a matter of political will in Albany. Given how many New Yorkers are struggling to make ends meet, this would be a logical means to address that.” He believes the state should increase its contribution to 40 percent, which he said comes with a price tag of $400 million annually. “I would suggest it’s a good investment that spurs the economy,” he said.

It’s unclear, however, whether Stringer’s or Schimminger’s proposals will find support in either the Democrat-run Assembly or the Republican-led Senate. Spokespersons for Assembly Speaker Carl Heastie, Senate Majority leader John Flanagan and for the Senate Independent Democratic Conference did not respond to requests for comment.

E.J. McMahon, research director at the Empire Center for Public Policy, a conservative think tank, believes the cost of expanding EITC is likely the only reason it hasn’t been achieved though it has the backing of fiscal conservatives. “It’s the most effective way to incentivize and reward work,” he said, noting that it would work better if expanded at the state level. He added, “It would win broad support if we could pay for it.”

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by Samar Khurshid, City government reporter, Gotham Gazette
     

Read more by this writer.

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Comptroller Pushes for Expansion of Tax Refund for Working New Yorkers Wed, 08 Feb 2017 03:29:20 +0000
Protecting Freelancers: Policy Innovation at Work http://www.gothamgazette.com/?id=6193:city-council-freelancer-protection-policy-innovation-at-work http://www.gothamgazette.com/?id=6193:city-council-freelancer-protection-policy-innovation-at-work Freelancers Rally

Freelancers Union rally 


In 2012 when I started bringing cases under the New York Labor Law and the Federal Fair Labor Standards Act the hot area was "independent contractor misclassification." Employers in the "on-demand" economy were (mis)classifying their employees as independent contractors to avoid paying overtime or, in some cases, the minimum wage. Employers did not have to buy unemployment insurance, workers compensation, or pay the employer portion of payroll tax (FICA). Over the next few years, almost every player in the on-demand economy would be sued for employee misclassification.

Eventually, companies began to figure out they were better off correctly classifying their workers as employees rather than risking large damage awards. We got our clients a fair deal because we had statutes that provided strong protections in the New York Labor Law (NYLL) and Federal Fair Labor Standards Act (FLSA).

During the years I was busy with employee misclassification cases, another type of client kept trying to retain me. They were photographers, consultants, writers, website developers and many other professionals, some operating as freelancers and some with small businesses. They were not covered by the NYLL or FLSA because they were independent contractors, not employees. Yet they were the victims of wage theft, too.

Their debts were sometimes small ($500) and sometimes quite large ($25,000) but the story was always the same: the freelancer or independent contractor worked, was paid about half their fee, and then the client, sometimes giving excuses, other times just disappearing, never paid the rest. The freelancers who sought me out were not an anomaly: The Freelancers Union estimates that about half of the 54 million freelancers in America in 2014 had trouble getting paid, and that 34% of those who had trouble getting paid were never paid a dime of what they were owed.

It became apparent to me that the lack of practical remedies to freelancer wage theft contributed to the problem. Unlike the landlord, utility company, or other vendors who could simply stop service if they were unpaid, freelancers had no real recourse. As a result, they were paid last, and if money ran out, they were the ones left unpaid. Legal action was impracticable because unlike cases brought under the NYLL and the FLSA, there were no additional damages available as a penalty for non-payment, no attorney's fees, and no liability on behalf of the owner of the employer.

Lawsuits for unpaid wages under $5,000 needed to be in the Small Claims Part of the New York City Civil Court as breach of contract matters. Breach of contract cases in the civil court (up to $25,000) and in the Supreme Court (above $25,000) were subject to expensive filing and service fees, not to mention myriad requirements meant to assure procedural fairness. The freelancer also needed to enforce the judgment themselves, a time consuming and potentially expensive process. The amount of the loss rarely justified the huge legal fees required.

One innovative solution was my new company Indepayment, a comprehensive platform for freelancer debt collection. Indepayment aggregates debts owed to freelancers and independent workers to create a steady stream of cases for commercial collection attorneys and debt collectors who work on volume and collect on contingency. Indepayment operates nationally, and has been growing exponentially since we started collecting debts in June 2015. We're also working with the Freelancers Union to educate freelancers about avoiding non-payment.

The New York City Council has put forward another innovative solution, in the form of a bill, Intro. 1017. Sponsored by Council Member Brad Lander and now supported by 28 Council members, it creates a statutory remedy for freelancer wage theft that provides for double damages, attorneys' fees, and civil penalties which mirror the remedies available under FLSA and the NYLL. The bill requires that freelancers have a contract, and makes it a violation not to pay or to pay after 30 days unless otherwise agreed. If passed into law, these would be significant new protections for those in the growing freelance economy.

Causes of action under the new law could be brought in addition to breach of contract matters in Court. In addition, freelancer wage theft matters are treated as violations of the city Administrative Code adjudicated by the Department of Consumer Affairs (DCA). Establishing a DCA administrative process alleviates some of the procedural complexity, delays, and costs associated with bringing cases in Supreme Court and Civil Court.

In addition, because the collectability of court judgments is sometimes difficult, the city's enforcement of violations is an important feature. The administrative process and the provisions of the bill that require reporting to the city of civil actions will allow the city to keep detailed records of wage theft recidivists and understand the scope of the wage theft problem in New York City.

Although the bill could go further – for example the NYLL and FLSA have provisions that make the owners of the employers liable for wage theft – it's a great start. Intro. 1017 deserves our support because our innovative and evolving freelance workforce deserves innovative solutions to guard against wage theft and protect its livelihoods.

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Jesse Strauss is an attorney based in New York City and Founder and CEO of Indepayment.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Protecting Freelancers: Policy Innovation at Work Thu, 25 Feb 2016 23:24:12 +0000