A new change in the Supplemental Nutrition Assistance Program (SNAP) proposed by the Trump Administration will curtail Louisiana’s ability to address the nutrition needs of childless adults in areas of high unemployment and high poverty. The flexibility that currently exists under SNAP allows states to ensure all adults have access to food, especially in regions that are not benefitting from the current economy. Danny Mintz of the Louisiana Budget Project breaks it down in The Advocate:
The program [SNAP] limits food stamps to 3 months of eligibility out of every 36 months for childless adults working fewer than 20 hours per week, regardless of whether they are working part time or actively searching for work. Since 1998, due to high rates of unemployment in the state, Louisiana has received either a partial or a full exemption from this time limit. Currently, the entire state is waived from the requirement. The new federal rule would sharply reduce the state’s flexibility in determining areas of high unemployment, and thus expose thousands of Louisiana’s poorest residents to the loss of benefits which can only be used to buy food.
This change comes at a time when Louisiana is seeing its lowest unemployment rate in years, but parishes such as East Carroll, West Carroll and Morehouse are not reaping the benefits of the growing economy. In places like East Carroll, unemployment was at 10.5 percent as of December 2018. Mintz explains why places such as East Carroll depend on the flexibility in SNAP:
Those who are subject to the three-month time limit on SNAP benefits are typically very poor, and face significant barriers to employment. Many have very limited access to transportation, have no high school or college diploma, live in rural areas where work is scarce, have a criminal record that limits their employment prospects, or suffer from undiagnosed mental or physical illness. Even so, most childless adults receiving SNAP benefits do work; about three-quarters are employed either while receiving food stamps or in the year before or after they receive food stamps. But often the jobs they qualify for do not provide enough hours or stable enough hours for them to consistently meet a rigid work requirement. Nationally, 70 percent of this population earns less than $6,070 a year. SNAP benefits are modest, averaging $132 per person, per month in Louisiana. It’s far from a luxurious allotment.
ITEP in Texas
Louisiana legislators often look to Texas as the gold standard when it comes to economic development and infrastructure. Baton Rouge businessman Richard Lipsey, writing on his Put Louisiana First organization, reminds us all that Texas has long given local governments control of whether to grant property tax breaks to manufacturers. That’s exactly what Gov. John Bel Edwards has done via executive order to Louisiana’s lucrative Industrial Tax Exemption Program:
In Texas ITEP is and has always been controlled by local government. Frankly, it’s the only thing that makes sense. Business developments bring new revenue but also new demands on infrastructure and schools that must be addressed in the communities they reside in. Communities must make clear and objective evaluations: How many new temporary or permanent jobs are actually created? Is this really expansion or maintenance? Will new capital expenditures actually reduce the permanent workforce? What additional other tax revenue will be generated if the exemption is granted? There were some reasonable positions to be debated in regard to the latest request. In fact, a local contractor who was one of the most conservative Republican members of the East Baton Rouge Council penned an article opposing this recent request on a conservative website.
Millionaire’s tax can fund vital programs
There has been renewed interest on Capitol Hill in raising the top marginal tax rate on incomes above $10 million in order to fund vital services, reduce the deficit and reduce income inequality. But progressive tax brackets can do a lot of good at the state level as well. Many states implement progressive income brackets, but few do enough counteract the damage done by regressive sales and property taxes that help fund state and local services. A new report by Wesley Tharpe of the Center on Budget and Policy Priorities discusses why raising state income tax rates makes sense:
High-income tax increases can generate substantial revenues for investments in people and communities that provide economic and social benefits over the long term. Raising personal income tax rates has allowed states to prevent or minimize harmful budget cuts or invest in ambitious new initiatives such as expanding early education, boosting access to college, improving infrastructure, and strengthening “rainy day” funds to prepare for the next recession. Evidence indicates that sustained support for public building blocks of growth can help states improve their residents’ well-being, expand opportunity and racial equity, and build more prosperous economies over time.
Higher income brackets at the top also mean state’s can alleviate the tax burden often placed on low-income residents. Expanding Earned Income Tax Credits and becoming less dependent on sales tax will help low-income residents afford basic needs and reduce inter-generational poverty. It is also good for state and local economies because any boost to the income of a low-income household will be spent in their communities on groceries, utilities, clothing and housing.
And because children in low-income families that receive income boosts attain more skills and education, they tend to work more and earn more as adults. Each $3,000 a year in added income that children in a poor family receive before age 6 leads to an estimated 135 more working hours a year between ages 25 and 37, plus a 17 percent increase in annual earnings, research has found. This helps communities and the economy because it means more people and families are on solid ground and fewer need help over the long haul.
The most progressive step Louisiana can take to make its income tax more effective is to eliminate the ability to deduct federal income taxes on state returns. This tax break alone costs the state nearly $1 billion per year, with the benefits flowing disproportionately to the richest 5 percent of households.
Safety net is more common than you think
There is a lot of stigma surrounding welfare, but the truth is that even if you have been fortunate enough to never need government assistance, you probably know someone who has. The safety net, comprised of the Supplemental Nutrition Assistance Program, public/subsidized housing, Temporary Assistance for Needy Families and more, helps 59 million Americans make ends meet. That is nearly one-fifth of the population. The Urban Institute’s Sarah Minton and Linda Giannarelli discuss other facts about the safety net:
Twenty-four million children (or 32 percent of the population under age 18) receive assistance from at least one of the programs included in this analysis (figure 1; table A.1). A much smaller number of seniors (ages 65 and older) receive assistance. Among all recipients, nonsenior adults (ages 18 through 64) make up the largest group at 50 percent. Children make up the next largest group at 41 percent, followed by seniors at 9 percent (figure 2; table A.1).
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Number of the day
87 – Percent of U.S. wealth owned by white households (Source: CBPP)