Ending poverty through tax credits?
Well, if there is a silver lining at all in the sad aftermath of Katrina, it is that it has helped push issues of poverty in the United States back onto the nation’s political agenda. Last month, a task force of U.S. Mayors, headed by Los Angeles Mayor Antonio Villaraigosa, issued its Poverty, Work & Opportunity report. This week the Center for American Progress think tank, headed by former Clinton Chief of Staff John Podesta, released its From Poverty to Prosperity report. Both credit (if that’s the right word) Katrina for spurring their proposals.
The Mayors’ report estimates that its proposals would “initially cost $44 billion” – this includes $22.9 billion in early childhood education grants, $19 billion for increasing the earned income tax credit, and $2.1 billion for start-up funding for a childhood savings account program that would provide an initial grant of $500 for newborns.
The savings accounts would allow families or others to make annual contributions to children’s accounts, which the federal government would match, up to an additional $500 for children from families earning less than the median income or $250 for children in families earning more than the median but below the 75th percentile. The accounts would help finance college education. Because of the annual matches, however, the program would ultimately cost $23.9 billion – meaning the cost of the overall package would ultimately be closer to $66 billion a year. No estimate is made of the anticipated effect these proposals would have on American poverty levels.
The Center for American Progress report, by contrast, loudly proclaims, based on scoring by Urban Institute number crunchers, that its plan would reduce the poverty rate by 50 percent in 10 years. Part of this gain would come from raising the minimum wage to 50 percent of the average wage (currently $8.40 an hour) and making it easier for workers to join unions. In terms of programs, the report’s authors propose spending $90 billion a year (which, as the authors point out, could be fully funded by rescinding the Bush tax cuts solely for families making over $200,000 a year) on a variety of education and tax credits not terribly dissimilar from what the Mayors propose. Specifically:
Earned Income and Child tax credits expansion: $37 billion
Pell Grant expansion: $17 billion
Housing voucher expansion: $10 billion
Youth and Prisoners Reentry program expansion: $6 billion
Unemployment insurance and benefits expansion: $8 billion
Saver’s credit expansion: $12 billion
From a community wealth perspective, one frustration is that neither report even bothers to mention how these programs will interact with folks on the ground doing anti-poverty work. The word “nonprofit” appears only two times (in both cases in relation to prisoner re-entry) in the 80-page Center for American Progress report and not at all in the Mayors’ report, while the phrase “community development” appears in neither report (except as the name of a city department in a footnote of the Mayors’ report). While new money to reduce poverty is desperately needed, the proposals’ reliance on tax credits and incentives to the exclusion of any discussion of the role of community organizations is disappointing.
Posted by Steve Dubb on 04/26/2007 at 08:13 AM
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