The people we tax into poverty

The people we tax into poverty

People across the political spectrum agree that our tax system shouldn’t push people into poverty. But while federal tax policy does a reasonably effective job at protecting low-income people who are elderly or have children, it fails to extend the same protections to childless, working-age adults. A new report by Chuck Marr and Yixuan Huang of the Center on Budget and Policy Priorities examines how a proposed change to key anti-poverty provisions of the tax code would correct this error:

Today, more than 5 million workers aged 19-67 are taxed into or deeper into poverty by federal taxes. The main reason is that the Earned Income Tax Credit (EITC) for this group is much too small (and for some, isn’t available at all) to offset the income taxes and employee share of payroll taxes that they must pay. The Working Families Tax Relief Act, introduced by Senators Sherrod Brown, Michael Bennet, Richard Durbin, and Ron Wyden, as well as by Representatives Dan Kildee and Dwight Evans in the House, would boost the maximum EITC for childless adults from about $530 today to $2,070, raise the income limit at which single individuals no longer qualify for the credit from about $16,000 to about $25,000, and expand the ages at which individuals can be eligible for this credit from 25-64 to 19-67 (except for full-time students aged 19-24, who would remain ineligible because their parents can claim many of them for the larger EITC for families with children). These changes would reduce the number of workers aged 19-67 (other than full-time students) whom the federal tax code taxes into, or deeper into, poverty to close to zero — from 5.51 million today to less than 100,000, a reduction of about 99 percent.

Even with this change to the federal tax code, state tax policy – including high sales taxes that effectively ask more from poor people than from the wealthy – continue to push childless working-age adults into or deeper into poverty. Whatever happens in Washington, Louisiana’s next crop of legislators should act replace the sales tax currently propping up the state budget with an income tax structure that asks the wealthiest Louisianans to pay their fair share.

End of a legislative era
Legislative term limits and attrition mean about one-third of next year’s Legislature will be newly elected next year. This change brings new opportunities for the state House and Senate to look more like the state population. In 2019, 23.6% of the state’s legislators were Black, compared with 32.6% of the state’s population. Only 15.3% of legislators were women, who comprise more than half the state’s population – a deficit painfully evident in this year’s debates over reproductive health and tax breaks for diapers and feminine hygiene products. But the looming turnover also means the loss of hard-won knowledge about the legislative process, with the potential for more hard-line partisanship. In The Advocate, Stephanie Grace takes a look back on John Alario’s career and the unique talents that the Legislature will lose with his retirement:

In his 48 years, Alario has been House speaker and Senate president, both twice. He’s been a Democrat and a Republican, and has worked closely with governors of both parties, from Edwin Edwards to Bobby Jindal to John Bel Edwards. And, especially as the House has become more confrontational, he’s kept the trains running on time through a combination of qualities you don’t see every day. One is a mastery of the process, and understanding of all the tools a legislative leader can use to push a desired result, whether in public or behind the scenes. A second is a philosophy that has its roots in the old days, the belief that the Legislature should give any governor’s agenda a chance at success. Alario managed to combine that instinct with an ability to help his members get what they wanted or needed if he could, which explains how he held the support of his GOP-majority members even as he worked with the current Gov. Edwards. A third is Alario’s gentlemanly manner, combined with a reputation for playing it straight with colleagues.

Changing the rules on climate change modelling
Louisiana is at exceptional risk from climate change over the next century, with the state facing extraordinary impacts to health, welfare and economic vitality as sea levels rise and higher temperatures drive more mosquito-borne illnesses further north. This makes accurate assessments of the effects of climate change crucial to state planning. But, as Bob Marshall writes in Times-Picayune, the Trump administration is moving away from more-accurate models of climate change in favor of models that paint a rosier picture. Unfortunately, if we put our collective head in the sand now, it will be underwater when the gulf rises.

Earlier this month Trump’s Environmental Protection Agency announced plans to rewrite the models in the cost-benefit analysis of most pollution regulations to give more weight to industry costs and less to your health. And the chief of the U.S. Geological Survey, the agency responsible for producing the congressionally-mandated National Climate Assessment, has decided projections for climate change impacts it uses will no longer reach to 2100, but will stop 40 years in advance. In other words, your children have no need to know the risks and costs they will face from rising seas, large hurricanes and more intense drought and forest fires. Of course, it must just be coincidence those climate models show that unless carbon emissions are dramatically cut back soon, the real devastating impacts of warming don’t occur in most places for another 40 years.

Education alone doesn’t solve poverty
For years, many policymakers and wealthy philanthropists have argued that if we could only fix education, a wide variety of social problems – poverty not least among them – would disappear. But decades of charter-focused education “reforms” have had little success in improving educational outcomes. So now, at least one billionaire philanthropist has realized that reducing poverty requires addressing wealth and income inequality. Nick Hanauer explains in The Atlantic:

To be clear: We should do everything we can to improve our public schools. But our education system can’t compensate for the ways our economic system is failing Americans. Even the most thoughtful and well-intentioned school-reform program can’t improve educational outcomes if it ignores the single greatest driver of student achievement: household income. For all the genuine flaws of the American education system, the nation still has many high-achieving public-school districts. Nearly all of them are united by a thriving community of economically secure middle-class families with sufficient political power to demand great schools, the time and resources to participate in those schools, and the tax money to amply fund them. In short, great public schools are the product of a thriving middle class, not the other way around. Pay people enough to afford dignified middle-class lives, and high-quality public schools will follow. But allow economic inequality to grow, and educational inequality will inevitably grow with it.

Number of the Day
5,510,000 – Number of people taxed into, or deeper into, poverty in the United States. (Source: Center on Budget and Policy Priorities)