“Suppose you’re a single parent raising two kids, ages 3 and 5. You were furloughed in the spring, when the big-box store you worked at downsized. You started getting hours again in the summer, enduring substantial risk by going to work with customers who didn’t always wear masks. Child care was a mess, and you had to scrape together help from family and friends.
It was a rough year — but you stayed afloat. In total, you ended up working about 1,000 hours last year at $14 an hour, or $14,000 total — plus there were the two stimulus checks the government sent out in April and December.
Less heralded but no less important to helping you pay the bills were a couple of tax credits the government offers: You got $1,725 through the complicated child tax credit (CTC) and another $5,600 from the earned income tax credit (EITC). That came out to $7,325 — a badly needed infusion. But as is the case every year, it was also a pain — you basically have to go to a tax preparer every tax season to help you with the paperwork to claim the credits.
This week, your member of Congress, in an unprecedented act of constituent outreach, asks you to hop on a Zoom. She’s working on legislation meant to make life easier for single parents like you, including a stimulus check. But it’s the two options to reform the tax credits that she wants to ask you about.
The first option: The government will increase your CTC a ton, so you get a whopping $7,200 a year ($3,600 per child), not just $1,725. Instead of a lump sum at tax time, the government will send you the money every month or so. Under this scenario, you’d still get the $5,600 from the EITC. The downside? You’d still have to go through all that tax prep every spring.
The second option: The government will junk the CTC — and will just send you $700 per month in the mail. That’s $350 per kid under 6, every month, regardless of whether you owe taxes. Perhaps just as appealing, there’s no tax-season paperwork to prepare. That’s $8,400 per year total, even more than the CTC in option one. The downside in this scenario: Under this plan, the EITC shrinks — and your EITC goes down to $2,000.
To recap: Both give you more money than you get now. Option one gives you more money than option two. But option two makes your life much easier logistically. You get big regular monthly payments whose amount doesn’t vary. And you would no longer be in a desperate rush every spring to get your tax return in for your big refund.
Option one above is what Democrats in Congress and the Biden administration want to do to tackle child poverty. Option two is Republican Sen. Mitt Romney’s plan to enact a new, simplified child allowance.”
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“If you make $14,000 a year, there are a bunch of state and federal programs out there to help you. And by “a bunch,” I mean a bunch.
Depending on the state you’re in, you may qualify for Medicaid. It’s not so simple, though — you’re eligible in every state that did the Obamacare expansion, but a bunch of states (Texas, Florida, Georgia, North Carolina, Mississippi) set the eligibility cutoff much lower. In Texas, single parents have to make less than $277 a month to qualify, so in this scenario, you’d be way too “rich.” (And getting your kids covered through Medicaid or S-CHIP is a whole other can of worms.)
Need housing? You can apply for a housing choice voucher under the Section 8 program, but it’s underfunded so you will have to navigate years or decades of waitlists.
Need help with child care and early education? There’s Head Start and Early Head Start. In addition, there’s the federal Child Care and Development Block Grant — but you probably won’t get it; only about 15 percent of income-eligible families do, and depending on your state, you might have to be enrolled in a formal welfare-to-work program.
Speaking of which, you might get some money from Temporary Assistance for Needy Families (TANF). But, again, most don’t, and for those who do it’s strictly time-limited and requires tedious “work reports” to prove you’re not too “lazy” to deserve it.
In the winter, if you need help with heat, there’s the Low Income Home Energy Assistance Program (LIHEAP) — but only 20 percent of eligible families get it.
You’ll probably be able to get Supplemental Nutrition Assistance Program (SNAP) benefits, or food stamps, to help with groceries. If you have an infant, you can probably get aid from the nutrition program for women, infants, and children. There are probably some other programs I’m forgetting.
Conservatives and libertarians sometimes see this laundry list and think, “Look at how much we do for poor people!” I see it and think, “Look at how ridiculously complicated the system we make poor people navigate is.””
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“Romney’s child allowance plan is generous. The Democrats’ plan is even more so. But Romney’s plan has one edge: It simplifies things for the people it’s supposed to benefit.”
“At least $63 billion—an amount larger than the current annual budgets of 42 states—of the boosted unemployment payments distributed as part of the federal government’s pandemic response has been distributed improperly, according to an estimate from the Department of Labor Office of the Inspector General. The office attributes a “significant portion” of those improper payments to fraud, and preliminary audits indicate that the actual amount of improper payments may be higher.”
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“The inspector general reports “a forty-fold increase” in the number of fraud-related matters, which have “exploded” since the CARES Act passed.”
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“payments to people who can’t work because of the pandemic (or due to the government’s response to it) is a defensible proposal. But even defensible proposals have costs to consider. Extending the federally boosted unemployment payments through August will cost taxpayers an estimated $246 billion—and that likely means that another $24 billion, or more, will be lost to fraud.”
Making Sense of the Minimum Wage: A Roadmap for Navigating Recent Research Jeffrey Clemens. 5 14 2019. CATO Institute. https://www.cato.org/publications/policy-analysis/making-sense-minimum-wage-roadmap-navigating-recent-research Gradually raising the minimum wage to $15 would be good for workers, good for businesses, and good for the economy Ben Zipperer. 2
Why the war on poverty failed — and what to do now John McWhorter. 12 29 2016. Vox. https://www.vox.com/policy-and-politics/2016/12/29/14112084/war-on-poverty-brooklyn-great-society Does welfare cause illegitimacy? — with Charles Murray (1994) | THINK TANK American Enterprise Institute. 4 9 1994. Commentary: War on Poverty: Large
“Biden is making relief for child care centers part of his larger caregiving plan, which he unveiled on Tuesday in New Castle, Delaware. “As a first step, Biden will immediately provide states, tribal, and local governments with the fiscal relief they need to keep workers employed and keep vital public services running, including direct care and child care services,” states the campaign document outlining the plan. (The campaign did not provide specifics on the among of relief the candidate would make available if elected.)
But the former vice president also promises to go beyond the immediate crisis and invest in child care for the future. His plan would provide free preschool to all 3- and 4-year-olds in the country. And for kids under the age of 3, the plan would create a system of tax credits and subsidies so that families earning less than 1.5 times the median income in their state would pay no more than 7 percent of their income for child care, with “the most-hard pressed working families” paying nothing.
The plan also includes tax credits to encourage employers to construct onsite child care facilities, something companies did during World War II that’s become harder to imagine today, as families (most often mothers) are expected to handle child care on their own.”
“The basic income suffers from a number of flaws it can’t get away from. The first is that it’s either too big, so it’s unaffordable, or it’s too small, so it doesn’t make a difference. In Europe, certainly in the UK, most of the basic income schemes that are advanced here, we’re talking about something equivalent to $85 a week. While that’s going to make a difference to some people, it’s not going to fundamentally change the life choices of the people it’s supposedly targeting.
If the objective is to emancipate people, then [a UBI] has to be close to $1,000, possibly $2,000 a month. At those levels, we’re talking about tripling the federal budget. No one’s really considering that a reasonable proposal. So it suffers from a sort of catch-22.”
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“There are lots of factors that cause people not to reach their potential that are not solvable through a reasonable individual cash distribution, because they are social infrastructure.
Social infrastructure services flow naturally to basic needs. If low-cost social housing is available, it flows to people who need it rather than people who can afford a larger house. We have a free national health care service here in the UK — people don’t just turn up at the doctor for fun, because it’s free. They go when they’re sick. People go into education programs when they need retraining. Basic social infrastructure is accessed by people at the time of need.”
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“We defined seven basic categories of essential services that meet three criteria. For someone to meet their full potential, they need safety, opportunity, and participation. So that is individual safety, opportunity to use their skills and abilities to improve their own lives, and ability to participate in the democracy.
What does that take, in a modern sense? They need somewhere safe to live, access to food, health care access, education, access to digital information and communication systems, and access to a transport system. Our seventh category we call legal, by which we mean access to the institutional mechanisms of democracy and society.”
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“The proposal for universal basic services is not a proposal for universal [public] provision. It is not that everybody will live in highly energy-efficient, low-cost, government-provided housing. It is that access to housing is available.
If you go on to the average university campus, you will see what looks very much like a universal basic services system. The university is providing a room in a shared environment, where you share a kitchen with someone. If you’ve got more money and you want to go and live in independent housing, then you move out into a house down the street.”
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“There’s still a private market and it would probably be the majority of consumption, but the expectation is that you’re creating a base floor within that market. And that would stimulate the quality of the market and enable more innovation in the rest of the marketplace.”
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“We modeled our original proposal. For the vast majority of the population, everybody earning median incomes and below, there’s a net positive. People right at the bottom are having something like 60 to 80 percent of their normal costs replaced by public services. That leaves them money in their pocket.
Around the median, there’s a small net benefit, and then at the higher end, we’re talking about net contributions that are in the dozens of dollars a month. But to put society on a sustainable path, we need to get to a higher level of responsibility and pay for the society we want. That means slightly higher levels of tax.”
Policy Basics: Federal Tax Expenditures 11 18 2019. Center on Budget and Policy Priorities. https://www.cbpp.org/research/federal-tax/policy-basics-federal-tax-expenditures The biggest U.S. tax breaks Drew Desilver. 4 6 2016. Pew Research Center Estimates of Federal Tax Expenditures for Fiscal Years 2019-2023. 12 18 2019. The Joint