Category Archives: Poverty

Who Pays Taxes in America in 2015?

Source: Citizens for Tax Justice, April 9, 2015

…Many taxes are regressive, meaning they take a larger share of income from poor and middle-income families than they do from the rich. To offset the regressive impact of payroll taxes, sales taxes and even some state and local income taxes, we need federal income tax policies that are more progressive.
Some features of the federal income tax offset the regressivity of other taxes, at least to a degree. For example, the federal personal income tax provides refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit, which can reduce or eliminate federal personal income tax liability for low-income working families and can even result in negative personal income tax liability, meaning families receive a check from the IRS.

These tax credits are only available to taxpayers who work and therefore pay federal payroll taxes. These progressive provisions do make the income tax more progressive, but overall they do little more than offset the regresssivity of other taxes that poor and middle-income families pay.

Estimates from the Institute on Taxation and Economic Policy tax model, which are illustrated in these charts and tables, include the following key findings:
■ The richest one percent of Americans pay 23.8 percent of total taxes and receive 22.2 percent of total income.
■ The poorest one-fifth of Americans pay 2.0 percent of total taxes and receive 3.2 percent of total income.
■ Each income group will pay a total share of taxes that is quite similar to each group’s total share of income.
■ Contrary to popular belief, when all taxes are considered, the rich do not pay a dispropor­tionately high share of taxes. Although each income quintile pays combined federal, state and local taxes that are roughly equivalent to their share of the nation’s income, this by no means indicates our tax system is fine as is. In a truly progressive tax system, millionaires and billionaires wouldn’t be paying roughly the same tax rates as working families earning $100,000 per year.

The gap between rich and poor schools grew 44 percent over a decade

Source: Jill Barshay, Hechinger Report, Education by the Numbers, April 6, 2015

The growing gap between rich and poor is affecting many aspects of life in the United States, from health to work to home life. Now the one place that’s supposed to give Americans an equal chance at life — the schoolhouse — is becoming increasingly unequal as well. I’ve already documented the startling increase since 2000 in the number of extremely poor schools, where three-fourths of the students or more are poor enough to qualify for free or discounted meals (see here), and I’ve noted the general increase in poverty in all schools here.

But now there’s new evidence that poor schools are getting increasingly short-changed by the states and localities that fund them. The richest 25 percent of school districts receive 15.6 percent more funds from state and local governments per student than the poorest 25 percent of school districts, the federal Department of Education pointed out last month (March, 2015). That’s a national funding gap of $1,500 per student, on average, according to the most recent data, from 2011-12. The gap has grown 44 percent since 2001-02, when a student in a rich district had only a 10.8 percent resource advantage over a student in a poor district.

Rising Food Insecurity and Conservative Policy in the US: Impact on the Elderly

Source: Peter S Arno, Kenneth A Knapp, Stephan Russo, Deborah Viola, World Journal of Social Science Research, Vol. 2 No. 1, 2015

From the abstract:
Food insecurity, a critical problem in the developing world, has recently received increased attention among wealthy nations. Food insecurity, broadly defined, is when a lack of resources prevents household members from having enough food. In the US, food insecurity has been rising while social safety net programs to ameliorate hunger among at-risk households have been targeted for cuts by conservatives. Our main objective was to assess the prevalence and impact of food insecurity among the elderly. In a survey of 500 older, homebound meal clients in New York City, we found that nearly one in five (17%) is food insecure, 89% endure chronic health problems, 14% live with severe functional impairments, 38% are in declining health, and 10% experience unmet needs for services. New York City’s oldest community residents have serious health problems, multiple unmet social service needs, and often suffer from food insecurity. Understanding the relationship between these issues is critical if community organizations and government agencies at all levels—even in wealthy countries—are to be more effective in assuring the well being of their oldest residents.

Improving Population Health by Reducing Poverty: New York’s Earned Income Tax Credit

Source: Jeannette Wicks-Lim, Peter S Arno, University of Massachusetts – Amherst, Political Economy Research Institute, Working Paper Series, Number 377, February 2015

From the abstract:
The relationship between low socioeconomic status and higher levels of morbidity and mortality has been well-established in the literature. Researchers, however, rarely test the link between health improvements and social programs or economic policies designed to alleviate poverty. In this paper, we examine the health effects of the Earned Income Tax Credit (EITC), a broad-based income support program that operates at the federal, state, and local level. Specifically, we examine the health impact of expanding New York State and New York City’s EITC benefits on low-income neighborhoods between 1997 and 2010. We estimate that the 15-percentage-point increase in the state and local EITC rates reduced the low birth weight rate in New York City’s poor neighborhoods by 0.45 percentage points. This level of impact is substantial—from 1997 to 2010 low birth weight rates in these neighborhoods only fluctuated between 9.0 percent and 9.8 percent. Our estimates also suggest that EITC’s impact on low-income neighborhoods is stronger than that experienced by the average EITC-recipient household. Aside from this study, we are aware of no other neighborhood-level analysis of EITC’s impact on health. This evidence of health benefits associated with the EITC program should encourage policymakers to integrate the use of social and economic policies, such as the EITC, in their public health interventions.

Low-Income Housing Policy

Source: Robert A. Collinson, Ingrid Gould Ellen, Jens Ludwig, National Bureau of Economic Research (NBER), NBER Working Paper No. w21071, April 2015
(subscription required)

From the abstract:
The United States government devotes about $40 billion each year to means-tested housing programs, plus another $6 billion or so in tax expenditures on the Low Income Housing Tax Credit (LIHTC). What exactly do we spend this money on, why, and what does it accomplish? We focus on these questions. We begin by reviewing the history of low-income housing programs in the U.S., and then summarize the characteristics of participants in means-tested housing programs and how programs have changed over time. We consider important conceptual issues surrounding the design of and rationale for means-tested housing programs in the U.S. and review existing empirical evidence, which is limited in important ways. Finally, we conclude with thoughts about the most pressing questions that might be addressed in future research in this area.

Unaffordable America: Poverty, housing, and eviction

Source: Matthew Desmond, Institute for Research on Poverty, Fast Focus No. 22-2015, March 2015

Matthew Desmond explores the crisis faced by poor families in finding and maintaining affordable housing in this Fast Focus brief. Drawing from his own extensive ethnographic and quantitative research, Desmond outlines the trends that led to the current situation: rising housing costs, stagnant or falling incomes among the poor, and a shortfall of federal housing assistance. As a result of these trends, most poor renting families now devote over half of their income to housing costs, and eviction has become commonplace in low-income communities. Poor single mothers with young children, particularly African Americans, are at especially high risk of eviction. Desmond reviews the consequences of eviction—for parents, children, and neighborhoods—and concludes with suggested policy remedies and a call to pull housing back to the center of the poverty debate.

Childhood Food Insecurity in the U.S.: Trends, Causes, and Policy Options

Source: Craig Gundersen James P. Ziliak, Future of Children, Research Report, Fall 2014

From the introduction:
In 2012, nearly 16 million U.S. children, or over one in five, lived in households that were food-insecure, which the U.S. Department of Agriculture defines as “a household-level economic and social condition of limited access to food.” Even when we control for the effects of other factors correlated with poverty, these children are more likely than others to face a host of health problems, including but not limited to anemia, lower nutrient intake, cognitive problems, higher levels of aggression and anxiety, poorer general health, poorer oral health, and a higher risk of being hospitalized, having asthma, having some birth defects, or experiencing behavioral problems. Many government programs aim explicitly to reduce food insecurity, including the Supplemental Nutrition Assistance Program (SNAP), the National School Lunch Program (NSLP), the School Breakfast Program (SBP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and the Child and Adult Care Food Program (CACFP). (Other social safety-net programs—for example, the Earned Income Tax Credit—can also help alleviate food insecurity by increasing household income.) The fact that food insecurity remains so high even though the government spent over $100 billion on the various federal food-assistance programs in fiscal year 2012 poses a significant policy challenge.

Food insecurity rates remain stubbornly high for a number of reasons. One is that we don’t fully understand what causes food insecurity or how food assistance and other programs can help alleviate it. Food insecurity has been researched extensively, and this research has helped policy makers and program administrators better address the problem.3 However, relatively little research has looked at what causes food insecurity among children in the first place, or the effectiveness of public policies, especially on more severe forms of food hardship.

In this policy report, we highlight new research that seeks to fill this gap. Much of this work comes from the Research Program on Childhood Hunger at the University of Kentucky Center for Poverty Research, which was underwritten by the Food and Nutrition Service of the U.S. Department of Agriculture (USDA).

How Hungry is America? FRAC’s National, State and Local Index of Food Hardship

Source: Food Research and Action Center, April 2015

From the press release:
While Congress threatens huge cuts in funding for the country’s safety net programs that keep or lift people out of poverty, new data released today by the Food Research and Action Center (FRAC) show that millions of Americans still struggle to afford enough food for their households. How Hungry is America?, FRAC’s latest look at food hardship, finds that one in six Americans (17.2 percent) said in 2014 that there had been times over the past 12 months that they didn’t have enough money to buy food that they or their families needed.

Temporary Assistance for Needy Families

Source: James P. Ziliak, National Bureau of Economic Research (NBER), NBER Working Paper No. w21038, March 2015

From the abstract:
In this chapter I provide a brief history of the TANF program, including changes made as part of the 2005 Deficit Reduction Act. I then present a variety of program statistics, including trends in aggregate and state-level caseloads and spending, along with changes in the demographic composition of the program, especially the shift from adult with child cases to child-only cases. I also highlight the changing composition of spending on the program from cash assistance to in-kind assistance, and the challenges faced in documenting total (cash + in-kind) caseloads and spending. I follow this with a discussion of the behavioral issues surrounding TANF, including the four program goals and possible modifications as part of the 2014 reauthorization legislation, and then I provide a systematic review of the research evidence on whether those goals have been met.

The Working Poor Confound the Experts

Source: Peter Coy, Matthew Philips, Rich Miller, Bloomberg Businessweek, January 15, 2015

The left and the right alike have pounced on the drop in Americans’ labor force participation rate to score political points. The rate tied an almost 37-year low of 62.7 percent in December, according to data released on Jan. 9 by the U.S. Bureau of Labor Statistics. And the poorest families are the least likely to be in the labor force.

So this factoid should come as a big surprise: Low-income families are the only ones whose participation rate has risen. The average for families in the lowest tenth of households by income rose by 11 percentage points over a 13-year period, to just under 44 percent. The participation rate of families in the top tenth of incomes fell by a little more than 3 percentage points, to just under 80 percent. To put it simply, the poor have been stepping forward while the rich have been stepping back.

These calculations were made by Nicolas Petrosky-Nadeau, a senior economist at the Federal Reserve Bank of San Francisco who is on leave from Carnegie Mellon University. He dug up the new data in collaboration with Robert Hall, an economist at the Hoover Institution and Stanford University. Petrosky-Nadeau says he and Hall were surprised by what they found, as are other economists who have seen the numbers. …

….The research undermines the Democratic case that rapid economic growth is essential to alleviating poverty, because it makes labor markets so tight that employers have no choice but to hire people some would prefer to avoid, such as racial minorities, the long-term jobless, the handicapped, and ex-convicts…. The research also weakens the Republican case that the welfare state keeps people from working….