If you’ve watched TV (or been exposed to any online advertising) in the last couple of months, you’ve almost certainly seen one of my favorite actors (and fellow Mizzou alumnus) John Hamm serve as the pitchman for a series of commercial spots promoting the tax services of H&R Block. April 15th is just around the corner!
Using slick advertising (explosions, zombies, and period-costumes) that will remind viewers of the hit TV show he is best known for, Mad Men, Hamm urges the viewer: “Don’t just get your taxes done, get your taxes won!”
Normally, I would give Hamm a pass on his role as a product pitchman; after all what celebrity hasn’t tried to benefit from their status? However, my years on MDC’s economic security team have brought me face-to-face with tax preparation business practices that prey on low-income working families by charging exorbitant fees. Those questionable fees and practices have taken a large bite out of one of our country’s largest anti-poverty programs: the Earned Income Tax Credit (EITC).
Quick primer on the Earned Income Tax Credit
The EITC is one of the few federal programs that have received bi-partisan support since its initial passage. Signed into law under President Ford, and expanded by Presidents Reagan, Clinton, Bush, and Obama, the EITC has had a significant impact on reducing poverty. In fact, President Reagan referred to the EITC as “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” Analysis by The Brookings Institution found that from 2009 to 2011, 2.2 million Southerners were kept out of poverty by the EITC alone.
For the 2016 tax year, as shown in the chart below from the Center on Budget and Policy Priorities, a single parent with two children that has gross household income between roughly $14,000 and $18,000 may be eligible for the maximum credit of $5,572. Similarly, a married couple with two children and income between roughly $14,000 and $24,000 may be eligible for that same maximum credit. For families living paycheck-to-paycheck, the promise of a significant cash infusion from the EITC each year too often masks the effect of the cut that paid preparers take for their services. The magnitude of the tax refund dollars (driven primarily by the refundable EITC) that are diverted from our country’s low-income tax filers is astounding.
Source: Center for Budget and Policy Priorities
In tax year 2014, 49 percent of North Carolina’s tax filers claiming the Earned Income Tax Credit used paid preparers. Using a conservative estimate for the average tax preparation fee of $200, over $91 million dollars were diverted from low-income households. Does $200 for tax preparation assistance sound egregious to you? Well, keep in mind that 60 percent of EITC-claiming tax households make less than $20,000 in adjusted gross income for the year. According to the NC Justice Center, the value of tax refunds diverted to paid preparers is equal to 85 percent of what the state of North Carolina spent on a state-based version of the EITC in 2014 before the General Assembly ended the program ($107 million).
While the tax preparation industry has shifted a good chunk of its advertising to its online products (which typically offer lower prices with fine-print caveats), brick and mortar stores are still where a large proportion of low-income households file their taxes. Most of the largest tax preparation firms operate a franchise model lending the weight of their corporate name to independent operators in communities across the country. These in-person locations typically charge consumers much higher rates to file their state and federal returns – and often charge extra for consumers claiming the EITC or to complete the necessary forms that to reconcile tax credits (financial assistance) received through the Affordable Care Act.
The high rates low-income households pay to meet their tax filing obligation isn’t the whole story. Consumer advocates have raised concerns about the lack of oversight and standards for the paid-preparer industry, but have not succeeded in securing protections against predatory practice. In testimony to the U.S. Senate Committee on Finance in 2014, Chi Chi Wu from the National Consumer Law Center noted that while CPAs, enrolled agents, and volunteers with the Volunteer Income Tax Assistance Program must complete testing and operate under strict regulatory oversight, private preparers can open businesses and operate without licensing or regulation.
Liberty Tax Service, recognized by the chain’s prominent use of contractors dressed up like the Statue of Liberty roaming strip mall parking lots and busy street corners, promises prospective business owners that with a $40,000 franchise fee (and other associated start-up and operations costs) in as little as 60-90 days anyone can begin helping consumers file their most sensitive and important financial documents. Last year, an article by The Virginian-Pilot highlighted dozens of lawsuits and forced closures of franchise locations between 2014 and 2016. In at least one these cases, a franchise owner with 50 locations had his e-filing privileges suspended in connection to reports of widespread fraudulent returns.
Another prominent national chain, Jackson Hewitt, was the focus of a recent local news story out of Knoxville, TN where a local independent contractor purportedly charged a mother of two who only earns a little over $25,000 roughly $600 to prepare a simple two-page return. According to the statement from the corporate office, the error was simply a lack of communication with its franchise operators about the fee caps on preparation services.
Strengthening our civic infrastructure for the low-income tax-filer
While the tax filing season is winding down, Southern communities should take the time to reflect on the important role that free tax preparation programs (both in-person and online) play in ensuring upward economic mobility for hard-working, low-income families. While large corporate tax-filing companies like H&R Block may have the most effective and beautifully crafted commercials (and John Hamm), they clearly don’t provide the best service for our region’s working poor. Instead, we should be looking to leaders in the South, like MDC’s Board Member Stephen Black of Impact America, that refuse to accept the current realities of the massive redistribution of the EITC to the paid preparer industry. In 2016, Mr. Black’s SaveFirst initiative supported a cadre of 675 IRS-certified student volunteers from universities across the South in completing nearly 16,000 tax returns and assisting clients in securing more than $20.4 million in tax refunds. Similar models of free tax preparation are offered by local volunteers (the majority of whom are retired CPAs) at VITA locations (the IRS Volunteer Income Tax Assistance Program). For consumers that prefer the independence of filing their return online, there are free tax-filing programs like The Benefit Bank or free programs that are verified by your state’s department of revenue. While programs like VITA and The Benefit Bank may be lesser known, and have much smaller marketing budgets than their commercial counterparts, they are providing valuable high-quality assistance to the working households in your community striving to achieve economic mobility.
This post is adapted from remarks MDC President David Dodson made on February 4 in Tempe, Arizona, to an audience of community college presidents, faculty, and administrators gathered for the American Association of Community College’s Pathways Project annual institute.
As I considered my remarks for today, my thoughts went to an extraordinary new novel by Colson Whitehead, The Underground Railroad. It is a magical work. The historic Underground Railroad was a series of well-concealed way stations that gave sanctuary to enslaved Africans fleeing to freedom in the North. In Whitehead’s tale, the Railroad becomes an actual subterranean rail line, a marvel of technical engineering that literally burrows under the slave states of the antebellum South—a pathway to safety and salvation, complete with actual locomotives and rail cars.
As described by Whitehead, the Railroad itself is a work of genius:
The stairs led onto a small platform. The black mouths of the gigantic tunnel opened at either end. It must have been twenty feet tall, walls lined with dark and light colored stones in an alternating pattern. The sheer industry that had made such a project possible. Cora and Caesar noticed the rails. Two steel rails ran the visible length of the tunnel, pinned into the dirt by wooden cross-ties. The steel ran south and north presumably, springing from some inconceivable source and shooting toward a miraculous terminus (pg. 67).
But the path is still not easy for those who view it as the one great hope for their liberation. Rules of passage are mysterious—opaque for people who have spent their lives in the closed and cruel system of slavery on plantations. Trap doors and dead ends make the path perilous. For those who do get on the Railroad, like the novel’s heroine, Cora, the danger of being captured and returned to the plantation—and to violent punishment—is a constant reality.
Cora is a young woman who has been brutalized in captivity. She is a third generation of her family to live in slavery. Her mother has run off from the plantation to seek her own freedom, leaving Cora to raise herself. Given a life of abandonment, forced to survive on the plantation by her own wit and native intelligence, Cora is relentless in her pursuit of freedom. She has escaped the plantation with Caesar, a brave fellow, also enslaved, who has seen glimpses of the wider world beyond the plantation and knows both the delights of freedom and the dangers involved in securing it. But Caesar is killed in a skirmish with a notorious slave catcher sent to find the duo. From that point, Cora persists to get to the railroad alone. By turns hopeful, terrified, confused she makes her way doggedly, alone.
For Cora, the beautifully engineered path of the railroad is a strange gift. Nothing in her life has prepared her to navigate it. Throughout the novel, she is truly dependent on the kindness of strangers, like station agents and conductors, to get to safety. Station agents, who shepherd escapees to railway stops, pair their knowledge of the path with their courageous spirit to help the enslaved enter the pathway to the freedom. Conductors rely on their own lived experience and geographic expertise to lead the train away from the cruel system of slavery and toward a land where survival and autonomy could become Cora’s reality.
The book follows Cora on her journey north from Georgia. The first stop on the railroad is South Carolina, a state that looks like the Promised Land, but in fact is a twilight zone of deception and cleverly concealed brutality. The next stop, North Carolina, possesses a culture of raw cruelty, where public lynchings are the occasions for picnics and band concerts in the town square. On Cora’s pathway to freedom, nothing is what it seems. Hope appears and then vanishes as each stopping point becomes a perverse mutation of the cruelty Cora has escaped on the plantation.
The Underground Railroad is about the unconquerable, existential human drive for the dignity of a better life. It is about the essential role that a brilliantly engineered salvific pathway plays to deliver a young woman to freedom and the fulfillment of her dreams. It is about the station agents and fellow travelers without whose leadership, courage, guidance, and wisdom Cora’s aspirations and even the pathway itself would have been insufficient to deliver a young enslaved girl to the threshold of freedom. It is, in many ways, a metaphor, for all that our work advancing equity and opportunity in the South requires.
The Underground Railroad speaks to me not just as a metaphor and as a literary work. It also is part of my personal story. My great-great grandfather, Stanton Hunton, with whom I am pictured here at the museum dedicated to the Underground Railroad in Chatham, Ontario, used the actual Underground Railroad to escape slavery in Virginia in the 1840s. Stanton’s story is worthy of a novel, itself, including two unsuccessful escape attempts before he managed to achieve (the Promised Land of) Canada, put his skills as a brick mason and carpenter to work for himself, and start a family. His story was the beginning of the mobility story of my father’s family.
Every family has a mobility story. And today the narrative of upward economic mobility and liberation is unquestionably dependent on attaining a postsecondary credential that prepares its holder to access, navigate, and advance within employment that offers meaningful, living-wage work. Like Cora and the Underground Railroad, the pathway from foundational education to a postsecondary credential to living-wage employment, even when brilliantly engineered, is fraught with pitfalls, trapdoors, headwinds, and rip-currents. Success in navigating the pathway requires the vigilant engagement of others at every step of the way, others who are committed to equity outcomes for each and every traveler.
And while Cora’s story offers a tale of overcoming, it also offers a caution. The Underground Railroad was a beautifully engineered system for ushering people to freedom. But its engineering was compromised by a surrounding culture that was not supportive of and, in fact, often hostile toward, people making the journey. In the absence of a fully supportive culture, Cora’s success depended on a high degree of personal heroism on her part that exacted a very high cost. The best engineered strategy for success along the pathway to upward economic mobility will run aground unless it is supported by a reinforcing culture of equity across the institutions that touch it. Otherwise the burden of success requires an unreasonable level of heroism on the part of individuals trying to make their way forward. And the cost of heroism can be toxic.
A few years ago, a deeply disturbing conversation ran across several issues of the alumni magazine of my college. Under the banner “My Classmates are Dying” was a dialogue carried out through letters to the editor of the alarmingly high, statistically significant rates of premature death by illness and even suicide of black men who had attended Yale College in the 1960s, when the university, an overwhelmingly white institution, began to open its doors seriously to men of color. (There were no women at Yale until the 1970s.) Death rates for African American alumni in the class of 1970 were three times that of whites in the same class. Scholars looking at these data and noting the physiological stresses associated with black men trying to advance in an often inhospitable culture made links to the phenomenon known as “John Henryism,” so named by the brilliant scholar of public health, Sherman James. According to legend, John Henry was one of the “steel drivers” who hammered down spikes used in the railroad expansion that made America big and rich. With the coming of the steam-powered drill, the livelihoods of the steel drivers like Henry were threatened. Henry, full of bluster, challenged the owner of the railroad to a contest pitting Henry against the new drill. Henry won the contest, but he died from the mental and physical strain.
John Henryism reminds us of the unacceptable personal burdens that fall on underrepresented people trying to navigate a culture where a commitment to equity is not pervasive. The price of success can be a harrowing journey like Cora’s or even life itself like the pioneers before me at Yale. And it persists. Just last Sunday, the New York Times ran an article about first-generation Latino college students who were able to obtain Social Security numbers that would allow them to lawfully work, drive, and pursue an affordable postsecondary credential, through the Deferred Action for Childhood Arrivals program (DACA.) The title of the article, “The Only Way We Can Fight Back is to Excel,” hit me in the gut. Excel at what cost? Like Cora? Like the Yale men?
We need less personal heroism and more equity and systematic support if the pathways we are dedicated to building are to deliver on their promise: Equity at every turn, for every individual on the path to opportunity. This work has existential importance for our young people and our institutions and our nation. Let’s let nothing stand in its way.
Love is in the air! As you celebrate Valentine’s Day with your bae or your friends, consider that just 50 years ago, some marriages were illegal. The ban on interracial marriage was found
The Edelmans in 1968
Source: New York Times
unconstitutional by the U.S. Supreme Court in the Loving v. Virginia case of 1967. This recent story on Peter Edelman and Marian Wright Edelman got us thinking about love and marriage…and economic mobility. (It also reminded us of that day Peter came to visit MDC.) Marian Wright, founder of the Children’s Defense Fund, and Peter Edelman, Carmack Waterhouse Professor of Law and Public Policy at Georgetown University Law Center, were the third interracial couple to be married a year after the Loving case. This union was the beginning of a powerhouse couple in the civil rights arena. At the time of their marriage, Marian was an accomplished Yale-educated civil rights lawyer and the first African-American woman admitted to the Mississippi bar. Peter had been an aide to U.S. Sen, Robert F. Kennedy and was working in policy and law. No doubt, Marian and Peter Edelman’s mutual support and encouragement contributed to their many successes. Similarly, one can speculate that some financial benefits of marriage helped in strengthening their partnership and the prospects of their three children as well. Just a year earlier, the marriage would have been unlawful.
And sure, love and commitment are great, but marriage historically is an economic engagement, too. Conventional wisdom points to financial benefits like having a dual income, the ability to share expenses, tax breaks, and lower rates on health insurance. The U.S. Supreme Court used the precedent set by Loving for reasoning as such in Obergefell v. Hodges (2005), which protected the right of same-sex couples to marry, making the institution available to even more people. There is research that suggests some economic benefit to some people who tie the knot. However, there is much debate about how marriage and financial benefits are associated with one another. While some argue that this link is direct and causal, others argue that the relationship between the two is more nuanced. For example, dual-earner households have higher household incomes and, therefore, more resources at their disposal that can be used for personal enrichment, creating a financial safety net, or investments in their children’s future. Proponents of this perspective suggest that strategies to improve upward economic mobility should focus on improving “the security of poor people and their children,” which will in turn “also tend to improve the stability of their relationships.”
But still, the moral of the story is: more marriages and the wealth gap closes, right? Sorry to ruin your honeymoon, folks, but the racial wealth gap persists regardless of family structure. As you can see in the figure below, the median, single-parent white family had roughly twice as much wealth as the median, two-parent black or Latino families.
Source: Demos. The Asset Value of Whiteness: Understanding the Racial Wealth Gap
This recent Demos report argues that “family structure does not drive racial inequity, and racial inequity persists regardless of family structure.” In short, the financial benefits of marriage are failing to close the racial mobility gap.
Chief Justice Earl Warren wrote in 1967: “The freedom to marry has long been recognized as one of the vital personal rights essential to the orderly pursuit of happiness by free men.” So, considering factors such as personal rights, happiness, and disparate benefits to different people, the Facebook status of the relationship between marriage and economic mobility might just be: “It’s complicated.”
One of my favorite aspects of our State of the South blog is how this medium provides MDC staff members the opportunity to think through new things we’re learning. This site is where we turn our curiosity to exploration, to analysis, and to asking difficult questions regarding how social, cultural, and economic factors influence the odds of upward economic mobility in the South. In light of our recent community work sessions discussing economic mobility across North Carolina with the John M. Belk Endowment, my “#NCMobilityMatters” radar is on high alert. I’m more attentive than before to the myriad issues and experiences that may keep N.C. residents, and people all across the South, from progressing from foundational education all the way to economic security with a living-wage job.
So when I attended a screening this past fall of the documentary Private Violence, which shines light on the alarming rate of intimate partner violence cases across North Carolina (as well as the barriers to prosecuting such cases), my “mobility radar” went off. I was struck by the enormity of intimate partner violence (which in some form affects one in three women and one in four men) and sexual violence (which affects one in five women and one in 71 men)—the frequency of these crimes and their overarching effects on every aspect of a victim’s life: their ability to take care of their own families, to seek mental and physical healthcare, to save money, and to pursue their educational and career aspirations. I came away from the documentary wanting to know more about how intimate partner violence and sexual violence deter those who are affected by it—most often women—from staying on their chosen path to success and security.
Source: National Coalition against Domestic Violence
Stalled Mobility for Victims
We often hear commentary regarding the long-term effects on perpetrators of being charged with intimate partner violence (also called “domestic abuse”) and gender-based violence. Being convicted of a violent crime and sentenced to time in prison can certainly have enduring effects for perpetrators; for victims, who are disproportionately female, the pain, violation, and trauma of abuse and assault can carry devastating, long-term consequences. When these gender-based and intimate partner violence crimes are perpetrated, the path to opportunity is interrupted for both victim and convicted perpetrator. (However, it should be noted that only one out of four arrested abusers is convicted, and less than half of gender-based violence crimes are reported.) Furthermore, the fear of reporting assault—and the resultant pain when reports fail to lead to just convictions—can compound the trauma that makes it difficult for victims to complete educational and career endeavors.
These crimes are not inevitable parts of our society—the abusive actions that cause interruptions in opportunity can be prevented, so that fewer perpetrators and victims are derailed from pursuit of economic security and rewarding employment. Below are just some examples of how intimate partner violence and gender-based violence impede paths to success for victims, who are disproportionately female:
- Employment and Economic Security
Nearly 50 years of working to expand opportunity in the South has confirmed MDC’s analysis that clear and accessible pathways leading from education to employment to economic security are crucial for building a more equitable society. So it’s unsettling to see that gender-based violence often inhibits progression and retention along the path to an economically stable future, particularly for women. As Private Violence demonstrates, these forms of abuse are pervasive in North Carolina, presenting further barriers to opportunity where there already is significant stalled upward mobility for those born into the lowest income quintiles. Indeed, the percentage of women in poverty in the state of North Carolina has increased in the last 10 years, and the rate of women victimized by gender-based violence in North Carolina has risen above the national average.
Violence, Mobility, and Belonging
It makes sense that trauma associated with interpersonal violence would have such life-crippling effects. After all, how are you supposed to move along the path from education and training to employment to savings to civic participation if you are being routinely told—physically, verbally, and emotionally—that your body, your power, your dreams are threatened or in someone else’s control?
When we talk about opportunity at MDC, we talk about three particular dimensions that position people on the pathway to success: belonging, thriving, and contributing. We know that when we create a civic narrative in which there is room for everyone to belong, and bodies and lives that are routinely and systemically told they don’t matter are lifted up and reaffirmed as valuable, communities become altogether stronger from a wider sense of communal investment and engagement. But currently, the messages to victims of gender-based and intimate partner violence are shaming or silencing, rather than supportive. The influence of these messages can be seen in the educational attainment and economic security figures cited above.
In order to increase opportunity for both those at risk of being perpetrators and those at risk of being victims, we need more affirming and equity-based messages about power and gender in order to prevent gender-based violence from occurring in the first place. We need to embrace messages that value people over power, and we need to intentionally communicate these messages to our youngest community members. This can happen at home, in schools, in media and in the workplace (e.g. middle school anti-bullying programs or corporate decisions to eliminate outsourcing to sweatshops). Those messages are a starting point for influencing policies and practices that view every human being worthy of traveling the path to economic security with safety and support.
We’re in a special season here at MDC: it’s the time of year when we select our new Autry Fellow, a recent college graduate who will spend one year learning from and contributing to MDC’s programs that help bring people and places closer to opportunity and success. As MDC staff members review applications each year, we keep in mind that an ideal Fellow brings to MDC a spirit of both reflection and hope: they critically examine systems that produce inequitable outcomes, but also firmly believe in the potential and strength of leaders and communities to make those systems better. Indeed, this determined mix of examination and encouragement is a crucial asset in any community working towards change. My colleagues and I saw this spirit first-hand when we discussed economic mobility with leaders in Fayetteville last month.
Our discussion with a cross-section of leaders in Fayetteville was the last in a series of community work sessions that MDC and the John M. Belk Endowment held throughout the state in 2016 to disseminate the report, North Carolina’s Economic Imperative: Building an Infrastructure of Opportunity. In these sessions, representatives from MDC, the Endowment, and various sectors in each locality examined data related to economic mobility in North Carolina and discussed strategies for changing the odds for success, rather than merely helping individuals beating the odds.
In mid-December, we traveled to Fayetteville: a mid-sized city in the Sandhills of North Carolina with strong higher education institutions and a notable military population, thanks to the presence of Fort Bragg. As we learned from session participants, some of Fayetteville’s greatest strengths lie in community leaders’ ability to come together and speak honestly and reflect about community challenges. But, participants told us, all too often, a thorough examination of the issues leads to exhaustion and discouragement, distracting from the great work—often of national recognition—done by dedicated leaders in education, government, philanthropy, public service, and more.
But the leaders gathered at Fayetteville Technical Community College’s Horticulture Education Center that Tuesday afternoon collectively refuted the persistent whisper of discouragement. “There’s a lot to be proud of, and we need to tell our story more effectively,” Dr. Larry Keen, President of FTCC, told the group. Keen and others acknowledged the barriers that can keep people in Fayetteville stuck at the bottom of the economic ladder: competition for limited resources, a cradle-to-career continuum with room for increased collaboration, and difficulty getting new perspectives involved in planning and design. But they also acknowledged that they had significant work to build on and resources to tap, including what they shared during our afternoon session: a group of knowledgeable leaders, their honesty and self-reflection, and their determined belief in the potential of Fayetteville’s residents and institutions. And they were ready to put these strengths into action: “We’ve got a lot of work to do,” Keen said. “We have an obligation and a responsibility to step in.”
Thank you, Fayetteville, for showing us at MDC what it looks like to have difficult conversations with compassion and integrity, without becoming discouraged or apathetic. Economic mobility requires having high expectations for what can be achieved—and those expectations are too often stolen by the hopelessness of poverty. With continued courageous conversations like this one, Fayetteville can begin changing the odds in their community.
A big thank-you to all the communities and leaders who spoke frankly with us this past year about the economic mobility opportunities and challenges in their communities. You can read here on the State of the South blog about our time in Western N.C., in the North Central Prosperity Zone, in Monroe, N.C. and Wilkes County, and in the Northeast and Southeast region.