Aging baby boomers face huge hurdle with Food Assistance Asset Test

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When most of us think of hunger and those in need, we think of children. As our recent Kids Count Data Book points out, too many Michigan children are currently facing poverty and hunger. But there’s another group of people who are also struggling with hunger, and it might come as a surprise: baby boomers.

I was alarmed to read a recent report by Feeding America, a nationwide network of food banks, that found 13 million adults age 50 and older now receive some sort of charitable food assistance. Due to their specific economic and health concerns, members of the baby-boom generation are particularly susceptible to hunger. Individuals age 50 to 64 don’t yet qualify for Medicare or Social Security and suddenly find themselves facing increased costs with limited and waning resources.

According to the study by Feeding America, 62% of older adult clients at food banks and pantries fall into this age group. These increased numbers are being seen in Michigan, too. The food-insecurity rate among older adults in Southeast Michigan rose from 7% in 2010 to 17% in 2014.

Over the next 25 years, the number of older adults is expected to more than double, with the baby boom quickly becoming the “senior swell.” From policymakers to advocates and service providers, we all have to be ready to make sure our seniors don’t have to go hungry.

For decades, our seniors have worked hard to build lives and raise families here in Michigan. They have done their part, and they deserve the utmost dignity and support as their needs change. That means that Michigan needs to have sound public policy and a strong safety net for older Michiganders. Unfortunately, state lawmakers have made a series of policy changes that have hurt seniors and low-income families and created barriers to financial stability instead of eliminating them.

In 2011, the Homestead Property Tax Credit was cut, inordinately hurting seniors. On average, seniors’ Homestead Property Tax Credit refund fell by 20% in 2012, 8% more than other taxpayers. The special tax exemptions for seniors were also eliminated, and the Michigan Earned Income Tax Credit was cut and continues to be threatened.

While we have to undo these inequitable tax changes, the state’s changes to public assistance are just as harmful. Michigan was one of the states that was hardest hit by the recession, and many of our at-risk populations have yet to experience any type of economic relief. In 2011, Michigan legislators went directly against the grain and made it harder for low-income people to get help by passing a $5,000 asset limit for food assistance. Meanwhile, 70% of the states have eliminated their asset tests.

As a reminder, food assistance or SNAP is a federal program paid for with federal dollars. This asset test does not save Michigan taxpayers any money, but it adds a major hurdle for those in need.

The $5,000 asset test includes cash and some savings. A household’s primary home and one vehicle are exempted, and the first $15,000 is exempted from a second vehicle if the household has more than one vehicle. As you can imagine, this would disqualify a significant number of baby boomers and seniors who may be in immediate need for assistance despite having accumulated some assets over their lives. Low-income boomers who have responsibly built up a savings nest egg now have to make a choice between reducing their savings accounts or going without needed food assistance—a lose-lose situation. Michiganders, including older residents, should be eligible for state assistance if they qualify based on their income, not their assets.

Not every working adult has the luxury of being secure in retirement, but they also don’t have the ability to keep working indefinitely. As the number of aging baby boomers in Michigan continues to grow, the need for some to receive state assistance is going to increase as well. State policymakers should be anticipating this need and preparing for it, and that can start with eliminating Michigan’s unnecessary asset test on food assistance.

– Gilda Z. Jacobs

 

Michigan families need federal action on EITC, CTC

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While much attention has been focused recently on protecting the Michigan Earned Income Tax Credit (EITC), there is equally urgent action needed in Washington to save critical pieces of the federal EITC and Child Tax Credit (CTC). The federal and Michigan EITCs combine to provide much-needed support to help working families rise out of poverty, and we have to fight this battle on multiple fronts in order to protect these valuable tools.

The three provisions of the federal EITC and CTC that are set to expire are: a larger EITC for families raising three or more children; a reduction in the EITC “marriage penalty” that some two-earner families face; and a lower CTC earnings exclusion that expands the credit to very low-income working families. These stipulations are critical to helping millions of Americans and hundreds of thousands of Michigan residents make ends meet and afford the very things that keep them working, such as child care and transportation.

If Congress does not preserve these provisions, more than 50 million Americans, including 25 million children, will lose part or all of their EITC or CTC. Right here in Michigan, 727,000 children in 415,000 Michigan families will lose some or all of their working-family tax credits and 176,000 children, and 357,000 Michiganders overall, will be pushed into—or deeper into—poverty.

Although these credits are facing uncertainty, some legislators in Washington have made clear their plans to make many expiring business tax breaks permanent. Rather than pitting our businesses and our workers against each other, the League and our allies are simply asking that these credits be treated equally and made permanent together.

If Congress is willing to make any corporate tax breaks permanent, they should in good conscience be willing to do the same to ensure that vulnerable working families are not left behind. The formula for economic success should include businesses and workers alike, and both state and federal elected officials should be working to reduce poverty and the need for government assistance, not the other way around.

The EITC and CTC are two of the nation’s most effective pro-work, anti-poverty policies—and research shows their impacts on the well-being of poor children and their families are long-lasting. By enabling one generation to work their way out of poverty, these credits help break the poverty cycle and give kids a better chance at success when they grow up.

These credits help families and also our state economy as a whole. According to the most recent data available, the EITC boosted the incomes of 846,000 Michigan households, putting about $1.9 billion into Michigan’s economy. The CTC also had a wide reach in Michigan, with 551,000 Michigan households receiving the credit.

We have to stop looking at these credits solely as line items in a budget, but rather as faces in our communities. These are the workers, parents, and veterans that live in our neighborhoods and work in our restaurants, shops, senior centers, daycares and schools.

About 62,000 Michigan veteran and military families receive the EITC or CTC, and about 602,000 Michigan mothers and 362,000 fathers in working families receive one or both of the credits.

As Congress considers making the recent EITC and CTC improvements permanent, it also has an opportunity to fix a glaring gap in the EITC that excludes workers who are not raising dependent children, including young people just starting out and noncustodial parents. This oversight in the federal income tax system virtually taxes millions of working poor adults into poverty, and making a more adequate EITC available to these workers would help correct this problem. House Ways and Means Committee Chairman Paul Ryan (R-WI) and President Barack Obama have proposed nearly identical proposals to expand the EITC for these childless workers, and Congress should seize this opportunity to act in a bipartisan way.

The state and federal EITC and CTC only go to people who work and are specifically designed to encourage employment and self-sufficiency. The EITC and CTC have a history of bipartisan support—from President Ronald Reagan to President Bill Clinton. It is now up to Washington to continue that bipartisan support by working together to save these important provisions and strengthen the EITC for childless workers.

– Gilda Z. Jacobs

 

Economic recovery leaves Michigan children behind

Michigan is the “comeback state,” so we’ve heard. But, for whom? Michigan has more children living in poverty now than it did in the last full year of the Great Recession. Not only that, but since 2008, there are more children whose parents lack secure employment and more children living in concentrated poverty. Children and families in Michigan are being left behind in the economic recovery.

According to the new 2015 Kids Count Data Book from the Annie E. Casey Foundation, Michigan’s ranking in overall child well-being has fallen for the second straight year. The state now ranks 33rd in the country overall, while other states that have chosen to invest in programs that support economic growth and people are doing better, like Minnesota, which ranks first in the country for overall child well-being.

The report, which focuses on key trends in child well-being in the post-recession years, ranks Michigan in four domains:

  • Education: 37th
  • Economic well-being: 33rd
  • Family and community: 29th
  • Health: 23rd

It is clear that the strategy to reduce taxes and disinvest in programs that support families has not worked. Even after significant tax breaks for corporations, parents are still struggling to find good-paying and stable jobs to achieve financial security for themselves and their children. The data book reveals that the number of children with parents without secure employment increased to 33%. That is a rate increase of 6% since the last year of the Great Recession and ranks Michigan in the bottom third of states.

We also continue to have an unacceptable number of children living in poverty and a widening economic gap between white children and children of color. The data book reports that the child poverty rate in Michigan increased by 26% with nearly one in every four children living in poverty, including nearly one in every two African American children and almost one in every three Latino children. Also startling is the increasing number of children living in high-poverty neighborhoods. The rate increased by 21%.

Given the impact that poverty has on educational outcomes, it isn’t surprising that the state’s lowest ranking is in education. The number of students considered not proficient in math and reading stagnated over the period in the data book. These trends occurred at the same time that the state made cuts in education spending. Although, in the upcoming budget year, over $31 million has been dedicated to initiatives and programs to improve third-grade reading, including some funding for early childhood investments—critical to long-term outcomes.

The state has had some substantial wins in children’s health since the Great Recession, such as a continued reduction in the number of kids without insurance, the number of teen births, and the number of teens using alcohol and drugs. However, these gains are overshadowed by the large number of kids living in poverty and poor educational outcomes.

If we are really to help children in our state thrive, we need to understand the importance of providing parents with the tools and support they need. Taking a two-generation approach is a proven practice to improve outcomes for children by ensuring that parents have access to opportunities like adult education, higher-wage jobs with benefits, and quality affordable child care. We also need a fair tax system that includes the state Earned Income Tax Credit, a proven poverty reduction tool. And, we need to continue strong investments in early childhood programs to ensure that kids are ready to learn by the time they get to school.

 – Alicia Guevara Warren

Young but not invincible: Young adults rely on credits too

When I graduated law school in 2008, I got rejection letter after rejection letter. I applied for every job you could imagine – part time, full time, hourly, salaried – the jobs just weren’t there. I eventually landed in a great office, but many millennials–those born between 1981 and 1997—who were just graduating high school, college, or from graduate programs, weren’t so lucky.

The job market was the worst in decades – record high unemployment rates, collapse of the Big Three, and the bursting of the housing bubble made jobs scarce. Census comparisons released at the end of last year showed that millennials have lower median earnings and are living in poverty at a higher percentage than their parents were at the same age, despite having a higher percentage of the population with postsecondary education. Additionally, millennials are more burdened with student debt than previous generations. The economic downturn resulted in a record high percentage of young adults moving back in with their parents.

This is precisely why young people should care about the Earned Income Tax Credit and the Child Tax Credit. The EITC is a refundable tax credit intended to at least partially offset federal payroll taxes of low- to moderate-income working taxpayers. The credit amount varies depending on marital status, number of dependent children, and annual income. The Child Tax Credit, which intends to reduce the cost of child rearing, provides a $1,000 credit per eligible child and may be partially refundable. According to the latest data, more than 800,000 taxpayers in Michigan received the EITC and more than 525,000 received the refundable portion of the CTC in 2013. These tax credits encourage work, help lift families out of poverty, and improve the lives of children.

According to a recent report from the Center on Budget and Policy Priorities, 13.9 million millennials nationwide received the EITC, refundable part of the CTC, or both in 2012. The credits averaged $2,200 and $1,300, respectively. Michigan had the 10th highest number of recipients among all states and Washington DC at 393,000. Nationwide, the EITC and CTC together helped keep 1.8 million millennials, and their 1.9 million children, out of poverty.

Expansions enacted in 2009 and later extended, boosted both the EITC and CTC, allowing more individuals to qualify and providing for greater tax relief. However, these expansions are set to expire at the end of 2017. If we allow these to lapse, 6.3 million young people, including 195,000 in Michigan, will lose all or part of their EITC or CTC, pushing about two-thirds of them into or deeper into poverty.

The good news is that many proposals recommend keeping the EITC and CTC as they are currently structured and some recommend expanding the EITC. Interestingly, President Obama and Congressman Ryan have similar proposals to expand the EITC for more childless workers. This would disproportionately benefit young workers, who are waiting longer to get married or have kids than previous generations.

The Great Recession was hard on a lot of people, and while we are recovering, we haven’t fully recovered. Extending and expanding the EITC and the CTC is just good policy. Congress should move sooner on these provisions, to provide certainty and stability, instead of waiting until the last minute.

– Rachel Richards

 

Making kids count in the state budget

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Conditions for Michigan’s kids are progressing in some areas of child well-being but in others…. well, let’s just say we’ve got some major work ahead of us, particularly when it comes to economic security. That’s the upshot of the newly released Kids Count in Michigan Data Book.

Fortunately, the budget plan spelled out by Gov. Rick Snyder last month does a good job in a tight budget year of addressing inequities by making some investments that will drive improvements for Michigan’s kids.

Most welcome is a $49 million initiative, including $24 million for child care quality improvements, to increase the chances of more children reading proficiently by the end of third grade.

(more…)

Child poverty in the 21st century

The number of Michigan children living in families with income below the poverty level drops by half when tax and non-cash benefits are included as income, according to the latest analysis from the national KIDS COUNT project at the Annie E. Casey Foundation.

The percentage of the state’s children who would be living in poverty if no government program benefits and tax credits were available, however, stood at 30 percent, as calculated by the Supplemental Poverty Measure. (more…)

Why kids count

Recent news reports celebrate the decline in the unemployment rate and the quickened tempo of the recovery. But four years into the recovery, Michigan’s child poverty rates remain consistently high.

In 2013, one of every four children in Michigan lived in a family with income below the federal poverty level (roughly $18,800 for a single-parent family of three and $23,600 for a two-parent family of four), according to the latest Kids Count in Michigan Data Book, released today. (more…)

Happy 40th Birthday, EITC!

Today is EITC Awareness Day, and this year marks the 40th anniversary of the widely recognized tool that lifts millions of working families and children out of poverty each year. States have the opportunity to build on the federal credit, which Michigan does. However, in 2011 the state’s Earned Income Tax Credit was cut leaving behind over 15,000 families in poverty in 2012. On May 5, the voters will have the opportunity to restore the credit by supporting an increase in the sales tax by one penny.

The Michigan EITC is only available to families who have earned income from working. The credit ensures that working families are better able to make ends meet. When combined with the federal EITC, working families are lifted out of poverty and children experience better outcomes, such as improved infant and maternal health; better school performance; greater college enrollment; increased work and earnings in the next generation; and Social Security retirement benefits. All of which also benefit Michigan’s economy. (more…)

More child care oversight needed

Every day in Michigan, parents head out to work with their young children in tow, dropping them off at local child care centers or homes. Child care is a necessity for many working families because they rely on two incomes to make ends meet or because they are raising children as single parents.

Yet oversight of health and safety requirements is stretched far too thin in Michigan, a new policy brief from the League concludes. (more…)

High poverty, unemployment harm economic growth

Often touted as the “Comeback State,” Michigan’s economic recovery has not included everyone as reflected in the state’s high poverty and unemployment rates. Leaving people behind will only hinder Michigan’s potential economic growth, which has already showed signs of slowing.

A recent report ranking states based on multiple indicators of economic security and opportunity reveals the state’s major lack of investment in its people. On almost every factor from poverty to education to affordable housing, Michigan is ranked worst or second-worst among the Midwest states. (more…)

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