Vance County braced for impact of ‘cliff’ deal
The most immediate impact of the fiscal cliff deal was seen Wednesday when major U.S. stock indexes swelled by at least two percent.
The deal was passed by the U.S. Senate in a vote early Tuesday morning and by the U.S. House of Representatives late Tuesday night. Local leaders say some highlights of the deal are expected to hit Vance County harder than others.
Extending jobless benefits for the long-term unemployed for one year is part of the deal that could benefit 2,385 out of work citizens in Vance County.
According to the most recent statistics from the N.C. Department of Commerce’s Labor and Economic Analysis Division, that number is equivalent to a 12.2 percent unemployment rate, ranking 95th of 100 counties in the state.
For Linda Fry, director at Vance County Department of Social Services, the extension of jobless benefits could mean seeing less people applying for the services they offer.
“It could go either way,” Fry said. “It depends on how much of people’s unemployment check is for Medicaid and food stamps.
“If they’re going to get an unemployment check continuing longer, they may not be over here applying for unemployment.”
Payroll taxes have been increased for all Americans, allowing rates to jump back up to 6.2 percent from 4.2 percent.
As people see an extra amount of money deducted from their paycheck, it may discourage spending locally.
“The payroll tax is going to have some impact on disposable income starting this month,” said Stuart Litvin, director of Henderson-Vance Economic Development Commission. “It is going to hurt a little bit.
“When you file taxes, what they did was advert is an increase in your general tax obligation, your regular tax rate for income tax purposes.
“So, therefore yes, it’s going to impact the disposable income, but the good part is that as a result of the negotiations the middle class will not face a tax hike when they file.”
Tax credits for college expenses were among items saved when Congress agreed on the deal.
College tuition tax credits created by the 2009 stimulus package will be extended for five years, benefiting an estimated 25 million low-income families, according to Forbes.com.
Known as the American Opportunity Tax Credit, it can trim up to $10,000 off the cost of a college degree, allowing families to get a maximum $2,500 tax credit in higher education-related expenses annually for four years.
At Vance-Granville Community College those given tax credits would substantially help with the overall cost of tuition and books.
“You can go full time for less than a couple thousand dollars in any given semester,” said Stelfanie Williams, president at VGCC. “It’s definitely another resource for students who are looking to figure out how to access education.”
For a full-time student taking 12 credit hours at VGCC, the cost of tuition for one semester is $883, or $1,766 for the full year, not including books or any additional academic related fees.
“Typically books are going to cost close to the same amount as tuition,” Williams said.
As a new Congress is sworn into office today, lawmakers will be confronted with more tax and benefit-related issues, which were temporarily postponed to avoid the fiscal cliff.
“We and our members have been, and continue to monitor the economic climate, including the ongoing battle in Washington regarding the fiscal cliff,” John Barnes, president of the Vance County Chamber of Commerce, wrote in an email response to questions. “The late deal is not a cure-all for our economy.
“There are still economic issues facing our country, which feeds the uncertainty for business owners in planning their growth and hiring strategies.”
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