tag:theconversation.com,2011:/es/topics/earned-income-tax-credit-38393/articlesearned income tax credit – The Conversation2021-04-26T12:11:11Ztag:theconversation.com,2011:article/1576562021-04-26T12:11:11Z2021-04-26T12:11:11ZHow lifting children out of poverty today will help them tomorrow<figure><img src="https://images.theconversation.com/files/396581/original/file-20210422-17-1o4tmjx.jpg?ixlib=rb-1.1.0&rect=0%2C520%2C5367%2C3268&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Keeping kids above the poverty line contributes to their stability in adulthood.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/full-length-of-mother-reading-picture-book-while-royalty-free-image/1214861921">Maskot/DigitalVision via Getty Images</a></span></figcaption></figure><p>As part of the latest COVID-19 relief package, the federal government has expanded the child tax credit and made it available <a href="https://www.cnbc.com/2021/04/13/new-3000-child-tax-credit-to-start-payments-in-july-irs-says.html">to all families with children</a> except those with the highest incomes. Families will get US$3,000 per kid ages 6 to 17, and $3,600 for younger children. The Internal Revenue Service will deliver half of this money as monthly payments of either $250 or $300 during the second half of 2021 and the rest as a lump sum during the 2022 tax season.</p>
<p>If the government extends this benefit beyond the one year that’s currently funded, as many <a href="https://www.insidernj.com/press-release/booker-brown-bennet-wyden-warnock-lead-senate-democrats-push-make-critical-tax-cuts-workers-families-permanent-next-recovery-bill/">members of Congress</a> and <a href="https://www.nbcnews.com/news/us-news/biden-s-expanded-child-tax-credit-would-be-dramatic-change-n1261247">the Biden administration</a> would like, this policy has the potential to dramatically <a href="https://www.povertycenter.columbia.edu/news-internal/2019/3/5/the-afa-and-child-poverty">cut child poverty by as much as 50%</a>. </p>
<p>This kind of arrangement is <a href="https://www.vox.com/2016/5/23/11440638/child-benefit-child-allowance">already the norm in many countries</a>, such as Canada, Germany and the United Kingdom. <a href="https://scholar.google.com/citations?user=XneK_7sAAAAJ&hl=en&oi=ao">As economists</a> who <a href="https://scholar.google.com/citations?user=QyEpkJ0AAAAJ&hl=en">have spent decades</a> <a href="https://scholar.google.com/citations?hl=en&user=CsIDXpcAAAAJ">studying poverty</a>, we believe it will have lasting benefits.</p>
<h2>Long-term benefits</h2>
<p>Many studies conducted in recent years show that lifting children from the burdens of poverty has the potential to improve their health and ability to get a good education.</p>
<p>For example, economist <a href="https://scholar.google.com/citations?user=qVzS26wAAAAJ&hl=en&oi=ao">Chloe East</a> found that when low-income families with young kids receive benefits from the <a href="https://www.doi.org/10.3368/jhr.55.3.0916-8197R2">Supplemental Nutrition Assistance Program</a>, the children are less likely to miss school and more likely to be in good health as they get older.</p>
<p>A team of researchers who assessed the effects of <a href="https://www.doi.org/10.1037/a0023875">reforms to cash welfare programs</a> conducted in the 1990s similarly found that helping low-income families pay their bills leads to their kids’ doing better at school in the future.</p>
<p>Other studies have looked into what happened when low-income families with children wound up with more money through expansions in the <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc">earned income tax credit</a>, or EITC – a benefit paid to workers with low levels of earnings that the government substantially <a href="https://www.everycrsreport.com/reports/R44825.html#_Toc4747515">expanded in the mid-1990s</a>.</p>
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<p>Researchers have found that this increased income was associated later on with students’ <a href="https://www.doi.org/10.1257/aer.102.5.1927">scoring higher on standardized tests</a> and becoming more likely to <a href="http://dx.doi.org/10.2139/ssrn.2674603">graduate from high school and go to college</a>, and in early adulthood they are more likely to <a href="https://doi.org/10.1086/697477">have a job and earn higher wages</a>.</p>
<p>Another study that one of us conducted with two other colleagues found that babies born to families benefiting from the EITC <a href="https://www.doi.org/10.1257/pol.20120179">are healthier overall</a>. Other research found that women who give birth while benefiting from the EITC <a href="https://www.doi.org/10.1257/pol.6.2.258">have better physical and mental health</a>. </p>
<p>And two of us conducted a study that detected <a href="https://www.doi.org/10.1257/aer.20130375">better health in adulthood</a> for people whose families benefited from the introduction of the <a href="https://www.fns.usda.gov/snap/short-history-snap">food stamp program</a> when they were children in the 1960s and early 1970s. Similarly, researchers have seen long-term improvements in terms of increased educational attainment among low-income children whose families received <a href="https://www.doi.org/10.1257/app.2.1.86">a type of basic income</a> paid to members of the <a href="https://repository.upenn.edu/pennwhartonppi_bschool/11/">Eastern Cherokee tribal government</a> out of casino profits.</p>
<p>When families with young children get access to cash welfare, that support has even been linked to higher earnings in adulthood and <a href="https://www.doi.org/10.1257/aer.20140529">longer lives</a>.</p>
<h2>An incomplete fix</h2>
<p>This entire body of research suggests that the benefits of alleviating poverty are significant when children get more money, food, health care and other resources early on, especially between <a href="https://developingchild.harvard.edu/science/deep-dives/lifelong-health/">conception and the age of 5</a>.</p>
<p>To be sure, providing all but the wealthiest families who have children under 18 with <a href="https://www.cnbc.com/2021/03/16/this-calculator-shows-how-much-you-will-earn-under-new-child-tax-credit.html">extra cash</a> will not begin to do away with all of the inequalities facing children in America. Nor will these payments ensure that all children ultimately have the same shot at good health, a great education or, down the road, opportunities to make a good living.</p>
<p>But we do believe that this policy, especially if it takes hold for the long term, will meaningfully improve millions of children’s lives and give them a much better start in life.</p>
<p>Among other things, it reverses a troubling trend. Since 1990, increases in federal spending aimed at benefiting children, including changes to the <a href="https://theintercept.com/2019/10/19/democrats-poverty-earned-income-tax-credit/">earned income tax credit</a>, have often <a href="https://www.brookings.edu/bpea-articles/safety-net-investments-in-children/">failed to assist the poorest families</a> in a country where <a href="https://www.census.gov/library/publications/2020/demo/p60-270.html">1 in 7 children were languishing in poverty</a> before the COVID-19 pandemic began.</p><img src="https://counter.theconversation.com/content/157656/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diane Whitmore Schanzenbach receives funding from the Robert Wood Johnson Foundation. She is a board member of the Food Research & Action Center and the Greater Chicago Food Depository. </span></em></p><p class="fine-print"><em><span>Hilary Hoynes receives funding for her work on long term effects of the social safety net from Arnold Ventures, the Russell Sage Foundation, The Washington Center for Equitable Growth, and the National Institute on Aging.
Hilary Hoynes serves as a board member of MDRC and the California Budget and Policy Center, both organizations work on policies around child poverty.</span></em></p><p class="fine-print"><em><span>Melissa S. Kearney is the Director of the Aspen Economic Strategy Group and is on the advisory boards of Notre Dame's Wilson-Sheehan Lab for Economic Opportunities and the Smith Richardson Foundation. </span></em></p>Many studies conducted in recent years tie lower poverty rates for children to better health and higher pay when they grow up.Diane Whitmore Schanzenbach, Professor of Education and Social Policy; Director of the Institute for Policy Research, Northwestern UniversityHilary Hoynes, Professor of Public Policy and Economics, University of California, BerkeleyMelissa S. Kearney, Professor of Economics, University of Maryland; Director, Aspen Economic Strategy Group, University of MarylandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1473132020-10-06T18:55:00Z2020-10-06T18:55:00ZTrump’s decade-old audit illustrates why the IRS targets the working poor as much as the rich<figure><img src="https://images.theconversation.com/files/361987/original/file-20201006-24-y76qo3.jpg?ixlib=rb-1.1.0&rect=118%2C65%2C4256%2C2846&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trump has tried to keep his taxes in the dark for years. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/president-donald-trump-acknowledges-the-crowd-during-the-news-photo/1149899043">Alex Wong/Getty Images</a></span></figcaption></figure><p>The New York Times’ exclusive on President Donald Trump’s taxes contains <a href="https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html">a lot of startling new findings</a>. </p>
<p>A few noteworthy examples: He paid only US$750 in federal income tax in 2016 and 2017 – and nothing at all in 10 of the previous 15 years; he took massive income tax deductions for property tax payments on a New York estate he apparently uses for personal reasons; he paid consulting fees to family members; and he took $70,000 in business deductions for haircuts. </p>
<p>The report also zeroed in on a fact that has been well known for many years yet in my mind overshadows all of the other discoveries: Trump’s taxes are under audit and <a href="https://www.marketwatch.com/story/president-trump-has-faced-a-decade-long-audit-of-his-taxes-heres-how-long-irs-audits-usually-take-2020-10-01">have been so since at least 2011</a>. Trump claims that’s why he can’t release his taxes, though the <a href="https://www.axios.com/trump-tax-returns-irs-commissioner-audit-20ebb0a7-dc47-4177-bf4c-565aa5cfb734.html">IRS itself says that’s not the case</a>. <a href="https://www.cnn.com/2020/09/30/politics/donald-trump-tax-returns-1st-debate-new-york-times/index.html">He also says</a> he has paid “millions of dollars” in taxes in recent years. </p>
<p>Why is it taking so long to audit Trump’s taxes, when the IRS <a href="https://www.irs.gov/pub/irs-pdf/p55b.pdf">usually wraps up its audits</a> within a year? </p>
<p>As a <a href="https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1997162">tax law expert</a>, I believe a reason Trump’s audit is taking so long is related to the IRS’s practice of targeting the working poor at rates comparable to the wealthy. It’s hard to reel in the rich and often easier to focus on the poor. </p>
<h2>The gray areas of tax law</h2>
<p>Tax law is often perceived as an exercise in crunching the numbers. The taxpayer – or an accountant – simply plugs in data from her various W-2s and 1099s, and out comes a figure. Some tax preparation services even show the taxpayer the real-time effect of each entry on the amount of tax owed.</p>
<p>In reality, tax law has plenty of gray areas, particularly for business owners, in which tax law depends on subjectively judging why a person did what he or she did.</p>
<p>When someone acts for business reasons, they should be able to deduct their expenses. As the saying goes, “You have to spend money to make money.” The federal income tax is a net income tax, meaning it respects that old saying and applies only to earnings that exceed costs. If someone is acting for personal reasons like consumption or leisure, a tax deduction is generally not allowed.</p>
<p>Uncovering the motives behind the activities of any person requires a lot of information and difficult analysis, but for someone like Trump, whose personality is his business, the task is exponentially harder.</p>
<p>For instance, is Trump’s Seven Springs estate in New York business or personal property? If it’s for business, property taxes paid on it are fully deductible. If it’s personal property, only $10,000 of the property taxes could be deducted, thanks to Trump’s own <a href="https://taxfoundation.org/tax-reform-explained-tax-cuts-and-jobs-act/">Tax Cuts and Jobs Act</a> of 2017. The answer depends on a lot of factors, such as how he promotes the property, what types of improvements he makes and what he does while there. Despite some contradictory statements from his sons, The New York Times suggests that Trump <a href="https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html">has treated the Seven Springs estate as business property</a>, which would allow him to fully deduct the taxes on the estate.</p>
<p>Another gray area is the $26 million he claims in consulting fees, including ones reportedly paid to family members such as his daughter Ivanka. To determine if consulting fees paid to a family member are actually nondeductible gifts, the IRS must examine what she was asked to do and whether the fees were reasonable. It is unclear from The New York Times story what exactly Ivanka was tasked with doing to earn the almost $750,000 in fees Trump deducted.</p>
<p>As for Trump’s $70,000 in haircuts, to determine if they were deductible, the IRS must understand whether they were unique to his job on “The Apprentice.” Inherently personal expenses – <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3705646">things like grooming, meals and commuting</a> – are incredibly difficult to deduct. Trump would have to demonstrate that his business motives completely outweighed his personal ones. In other words, he would have to show that he would not have gotten haircuts but for his business. Since he deducted the cuts, we can presume his hair would have gone unkempt without the show.</p>
<figure class="align-center ">
<img alt="Treasury Secretary Steven Mnuchin testifies during a House Financial Services Committee on May 22, 2019. A screen behind him displays President Trump and a list of times he has promised to release his tax returns." src="https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=426&fit=crop&dpr=1 600w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=426&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=426&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=535&fit=crop&dpr=1 754w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=535&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/361988/original/file-20201006-18-uiexi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=535&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump has repeatedly promised to release his tax returns, a point raised during Treasury Secretary Steven Mnuchin’s House testimony in May 2019.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/treasury-secretary-steven-mnuchin-testifies-during-a-house-news-photo/1150961593">Mark Wilson/Getty Images</a></span>
</figcaption>
</figure>
<h2>Easier targets</h2>
<p>Compounding the difficulty of sorting out these gray areas, the IRS is <a href="https://www.npr.org/2020/04/09/830159777/irs-budget-cuts-and-staffing-challenges-create-coronavirus-payment-headaches">operating on a shoestring budget</a>, despite research showing that <a href="https://www.cbo.gov/budget-options/2018/54826">a dollar of investment in the IRS yields more than a dollar in tax collections</a>. Auditors must stretch their budgets to uncover the information they need and then make difficult judgment calls.</p>
<p>The IRS’s limited resources mean that <a href="https://www.documentcloud.org/documents/6430680-Document-2019-9-6-Treasury-Letter-to-Wyden-RE.html">auditors end up focusing their attention</a> on cases with more straightforward issues and more accessible information. That’s why <a href="https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">lower-income individuals receiving the earned income tax credit</a> were audited at a 1.2% rate in 2016, <a href="https://www.irs.gov/pub/irs-pdf/p55b.pdf">the most current year of mostly complete data</a>, comparable to the audit rate of roughly 1.5% for individuals earning over $500,000.</p>
<p>Typically, EITC audits are resolved within a year. That’s because examiners can look for objective facts, such as how many children are in the home, rather than sorting out subjective motives behind expenses. Often computers can quickly flag errors, making for more open-and-shut cases. </p>
<p>In addition, as my research has shown, state and federal governments already have <a href="https://scholarship.richmond.edu/law-faculty-publications/1435/">a lot of information about individuals receiving public assistance</a>, such as the earned income tax credit. Auditors don’t have to spend their limited resources getting information out of EITC recipients.</p>
<p>While auditing the poor may be easier than targeting the rich, auditing wealthier individuals is likely to do much more to close the tax gap – the difference between what is owed to Uncle Sam and what is actually collected – which the <a href="https://www.taxpolicycenter.org/briefing-book/what-tax-gap">IRS most recently estimated at about $381 billion</a>. Because <a href="https://www.irs.gov/pub/irs-pdf/p5364.pdf">most misreported income comes from cases</a> where the taxpayer alone controls the information about the income, the IRS might collect more underpayments if it had more resources for auditing the rich. </p>
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<h2>Letting the big fish go</h2>
<p><a href="https://www.irs.gov/newsroom/taxpayer-bill-of-rights-8-the-right-to-confidentiality-0">Taxpayer privacy protections</a> make it impossible to know exactly why Trump is being audited. But the difficulty of sorting out these gray areas of law while Trump holds most of the relevant information almost certainly has contributed to the length of the audit.</p>
<p>If nothing else, the reporting on Trump’s taxes highlights that taxpayers like him are the biggest fish but the hardest to catch, particularly when you have a cheap rod. IRS audits have instead focused on smaller fish downstream.</p><img src="https://counter.theconversation.com/content/147313/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hayes Holderness does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Because the rich often have complicated deductions that dabble in the gray areas of tax law, it’s simply easier to audit the straightforward taxes of the working poor.Hayes Holderness, Assistant Professor of Law, University of RichmondLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1418462020-08-03T12:00:19Z2020-08-03T12:00:19ZMillions of America’s working poor may lose out on key anti-poverty tax credit because of the pandemic<figure><img src="https://images.theconversation.com/files/350687/original/file-20200801-22-1qjeezj.jpg?ixlib=rb-1.1.0&rect=26%2C17%2C3000%2C1967&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Demand for food aid has soared during the pandemic.</span> <span class="attribution"><span class="source">Joe Raedle/Getty Images</span></span></figcaption></figure><p>The pandemic is driving American families to the edge, with tens of millions at risk of <a href="https://theconversation.com/landlord-leaning-eviction-courts-are-about-to-make-the-coronavirus-housing-crisis-a-lot-worse-142803">losing their homes</a> and over 1 in 10 U.S. adults reporting their households <a href="https://www.cbpp.org/research/poverty-and-inequality/more-relief-needed-to-alleviate-hardship">didn’t have enough to eat</a> in the previous week. </p>
<p>While <a href="https://www.nytimes.com/2020/07/28/us/politics/coronavirus-relief-bills-house-senate.html">Congress debates extending unemployment benefits</a> that expired on July 31 and other additional aid, there’s an important program that already exists that could help struggling Americans get through the crisis however long it lasts. Known as the <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit">earned income tax credit</a>, or EITC, it provides aid primarily to the working poor. In a typical year, <a href="https://www.census.gov/topics/income-poverty/supplemental-poverty-measure/library/publications.All.html">it lifts more than 8.5 million people out of poverty</a>, while improving the health and well-being of parents and children. </p>
<p>Since the credit depends on earned income, many families may be at risk of losing all or some of the benefit because <a href="https://fred.stlouisfed.org/series/CCSA">so many were laid off</a> as <a href="https://www.cbsnews.com/news/us-economy-shutdown-coronavirus-saved-2-7-million-lives/">economies in many states shut down</a>. Even as restaurants and other businesses reopen, it’s <a href="https://voxeu.org/article/covid-19-and-labour-reallocation-evidence-us">likely that many of those who lost</a> their jobs <a href="https://www.cnn.com/2020/07/07/economy/job-losses-coronavirus/index.html">will remain unemployed or underemployed</a> for many months or longer. </p>
<p>Our own research shows changes to the structure of the U.S. economy, with the <a href="https://github.com/alice1020/COVID-unemployment-and-income-supports/blob/master/Occupational_inequality_and_COVID-19_Modifying_ex.md">sharp growth of low-wage and unstable jobs</a>, is weakening the EITC’s effectiveness at fighting poverty.</p>
<p><a href="https://www.forbes.com/sites/elainemaag/2020/06/03/heroes-act-would-expand-the-eitc-for-childless-workers-and-help-fight-recession/#1621b8b96810">Some lawmakers are trying to reform</a> the EITC as part of the next coronavirus bailout to ensure it helps more Americans and make it more like a <a href="https://theconversation.com/search/result?sg=91b5ab76-015f-42ce-9676-67954badd307&sp=1&sr=1&url=%2Fbasic-income-for-all-could-lift-millions-out-of-poverty-and-change-how-we-think-about-inequality-53030">basic income guarantee</a>. We believe doing so would not only ensure low-income Americans continue to have access to this vital tax credit during the pandemic, additional changes could also strengthen the program for years to come. </p>
<h2>The EITC success story</h2>
<p>The earned income tax credit, which <a href="https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">supplements earnings for many low- and moderate-income workers</a>, has helped buffer economic hardship for single parents and other recipients since it was created in 1975. </p>
<p>Eligible taxpayers receive the credit after they file their taxes. And unlike a deduction, even those who didn’t pay any income tax can receive the credit, which they’ll get as part of their refund. Twenty-eight states and the District of Columbia <a href="https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/state-earned-income-tax-credits">also offer their own EITCs</a>, typically based on the federal credit. </p>
<p>In 2019, taxpayers <a href="https://www.ncsl.org/research/labor-and-employment/earned-income-tax-credits-for-working-families.aspx">received about US$63 billion in credits</a> through the federal EITC, making it the government’s largest cash safety net program for working families with children. Recipients qualify for the credit based on how much money they earn and depending on their marital status and number of children. The benefit rises with each dollar earned until reaching a peak and then phasing out. </p>
<p>For example, in 2019, a <a href="https://www.census.gov/programs-surveys/saipe/guidance/model-input-data/cpsasec.html">single person earning $13,545 a year received $392</a>, while a typical family of four with an annual income of $22,261 received roughly $2,951 – which comes out to an extra $250 a month.</p>
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<p>Put another way, a family with one child <a href="https://www.law.cornell.edu/uscode/text/26/32">receives an average credit</a> of 34 cents for every dollar of earned income, which rises to 40 cents for two and 45 cents for three or more children. </p>
<p>The tax credit has been tremendously successful. In 2018, the latest data available, the EITC lifted <a href="https://www.cbpp.org/earned-income-tax-credit-and-child-tax-credit-have-powerful-antipoverty-impact-8">about 10.6 million people out of poverty and reduced its severity for another 17.5 million</a>. And since its inception, <a href="https://www.nber.org/books/moff14-1">it has reduced child poverty</a> by 25%. </p>
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<p>But the benefits extend well beyond providing struggling families with more income. Research shows the credit <a href="http://www.nber.org/papers/w16296.pdf">has helped improve the mental and physical health of mothers</a>, <a href="https://www.doi.org/10.1111/ppe.12211">improves perinatal health of mothers and their children</a>, <a href="https://pubmed.ncbi.nlm.nih.gov/27056961/">improves child development</a>, <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3104729">reduces incidents of low birth weight among infants</a> and <a href="https://www.doi.org/10.1257/aer.102.5.1927">improves children’s cognitive function</a>. </p>
<p>It also <a href="http://www.crfb.org/blogs/eitc-attracts-bipartisan-praise-and-proposals">enjoys strong bipartisan support</a> because of its focus on encouraging and supporting working. </p>
<p>But the EITC only helps individuals able to find work, which becomes a bigger challenge in a pandemic or <a href="https://www.nber.org/papers/w19785">severe recession</a>. </p>
<p><a href="https://github.com/alice1020/COVID-unemployment-and-income-supports">Our unpublished calculations</a> from a <a href="https://www.bls.gov/cps">national representative survey</a> showed that about a fifth of the <a href="https://www.eitc.irs.gov/partner-toolkit/basic-marketing-communication-materials/eitc-fast-facts/eitc-fast-facts">25 million</a> EITC beneficiaries in 2019 lost their jobs from March to April and over 16% remained unemployed in June, the latest data we have available. That means over 4 million working families could lose a large portion of their benefits in 2021, depending on a variety of factors. </p>
<h2>Reforming the EITC</h2>
<p>While these problems are most obvious in a recession, they’ve worsened over the past four decades as the <a href="https://voxeu.org/article/work-past-work-future">labor market</a> <a href="http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.308.299">has changed</a>.</p>
<p>The share of workers doing low-skill, low-wage work has jumped from 42% in 1980 to about 54% in 2016. And an increasing number of these jobs are in the precarious gig economy that doesn’t provide stable incomes. That means workers are less likely to see a steady aid from the EITC because the maximum benefits are gained when working full time at minimum wage.</p>
<p>The EITC’s also provides very little support to those without children. A nonpartisan think tank estimates that about 5.8 million adult workers without any children as dependents <a href="https://www.cbpp.org/sites/default/files/atoms/files/5-8-20tax.pdf">are taxed into poverty</a> – or impoverished further – each year because their EITC is too small to offset their federal income and payroll taxes.</p>
<p><a href="https://www.hassan.senate.gov/news/press-releases/senators-hassan-and-shaheen-push-for-tax-credit-expansion-for-hard-working-families-in-next-covid-19-relief-package">House Democrats</a> are pushing to reform the EITC in the next coronavirus relief bill. Specifically, they’d like to tweak the credit’s phase-in so that workers receive more benefits for fewer hours worked, allowing those who lost their jobs and remained unemployed for the remainder of 2020 to maintain benefits similar to last year. They also would lower the minimum age for receiving the credit to 18 from 25 for certain vulnerable groups like those experiencing homeless. </p>
<p>We’d suggest also increasing the benefit for tax filers without children and lowering the minimum age for everyone so that the millions of young people graduating from high school and college into an economic recession can get additional support. </p>
<p>These reforms would <a href="https://www.taxpolicycenter.org/taxvox/using-eitc-help-fight-economic-slowdown">not only help now</a> but could also deepen the impact of the EITC by creating an income floor for more people as the economy changes, essentially creating something very much like a basic income guarantee. A key difference, however, is that most universal basic income proposals <a href="https://www.marketwatch.com/story/the-push-for-universal-basic-income-is-gaining-momentum-amid-the-pandemic-11595874035">don’t require recipients to work</a>. </p>
<p>While we cannot fully predict how interactions between job losses and the tax and benefit system will play out, this moment presents an opportunity to test reforms that would benefit low-income working families for years and decades to come.</p><img src="https://counter.theconversation.com/content/141846/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rebecca Hasdell receives funding from the Canadian Institutes for Health Research. </span></em></p><p class="fine-print"><em><span>Alice Milivinti and David Rehkopf do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The earned income tax credit lifts around 6 million of the working poor out of poverty every year, but with the economy hammered by COVID-19, many might not get the benefit they need.Rebecca Hasdell, Postdoctoral fellow, Stanford UniversityAlice Milivinti, Postdoctoral Researcher, Stanford UniversityDavid Rehkopf, Associate Professor of Medicine, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1200502019-08-05T12:57:40Z2019-08-05T12:57:40ZThis tax credit wasn’t meant to help with housing, but that’s exactly what it’s doing<figure><img src="https://images.theconversation.com/files/285905/original/file-20190726-43153-1obci51.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Families can use their EITC to improve their housing.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/row-brick-apartment-buildings-on-corner-709000537?src=5wktrqvoZ58CrUJHhNTcEA-1-1&studio=1">Colin D. Young/Shutterstock.com</a></span></figcaption></figure><p>As <a href="https://www.wsj.com/articles/as-more-millennials-rent-more-startups-want-to-loan-to-them-11557739800">rents rise</a> and <a href="https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/">wages stagnate</a>, <a href="https://www.urban.org/sites/default/files/publication/54106/2000260-The-Housing-Affordability-Gap-for-Extremely-Low-Income-Renters-2013.pdf">many families struggle to find affordable housing</a> in the U.S.</p>
<p>This is especially true for low-income households who often spend <a href="https://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_State_of_the_Nations_Housing_2019.pdf">more than half their income</a> on rent. </p>
<p>The U.S. has a number of housing policies to help low-income families find and afford housing, but only about <a href="https://www.jchs.harvard.edu/sites/default/files/Harvard_JCHS_State_of_the_Nations_Housing_2018.pdf">one quarter of eligible households</a> got assistance in 2018.</p>
<p>Thus, my colleague <a href="https://www.maxwell.syr.edu/pa/cpr/Michelmore,_Katherine/">Katherine Michelmore</a> and <a href="http://fordschool.umich.edu/faculty/natasha-pilkauskas">I</a> considered whether a different type of policy – the Earned Income Tax Credit (EITC) – <a href="https://doi.org/10.1007/s13524-019-00791-5">might help improve families’ access to housing</a> by giving parents more disposable income. We wanted to know if further expanding the credit might help address the housing affordability crisis.</p>
<h2>Getting money back</h2>
<p>The EITC is a refundable tax credit that provides a subsidy to mostly low-income working parents.</p>
<p>Although people without children can get the EITC, fewer are eligible. The EITC allows low-income workers to both reduce their total tax liability and get money back – <a href="https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">on average about $3,000 a year</a> – even if they do not owe taxes.</p>
<p>This means that for a low-income family who makes about $20,000 a year, the EITC can increase take-home earnings by more than 15%.</p>
<p>The EITC <a href="https://www.epi.org/publication/ib370-earned-income-tax-credit-and-the-child-tax-credit-history-purpose-goals-and-effectiveness/">began in 1975 as a temporary credit</a> aimed at helping low-income parents. The goal was to reduce payroll taxes these parents paid and help them with the rising costs of basic goods, like food and gas.</p>
<p>The EITC was made permanent in 1978 and has been expanded a number of times since then. For example, in 1993 the benefit was expanded to give families with two or more children a larger credit.</p>
<p>In 2009 it was again made larger for families with three or more children. Our study looked at all of the expansions from 1990 through 2016.</p>
<p>In the U.S., about <a href="https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">26 million families a year</a> got the ETIC. Many studies have shown the EITC <a href="https://doi.org/10.3386/w5158">increases employment</a> and <a href="https://doi.org/10.3386/w21340">reduces poverty</a>, but we could find no previous studies that had looked at its impact on housing. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=382&fit=crop&dpr=1 600w, https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=382&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=382&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=480&fit=crop&dpr=1 754w, https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=480&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/285904/original/file-20190726-43149-wo92uu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=480&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Ford, who was instrumental in creating the EITC, meeting with his Cabinet in 1975.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Gerald_Ford#/media/File:President_Gerald_Ford_meets_with_his_Cabinet_June_25_-_1975.jpg">David Hume Kennerly/National Archives and Records Administration</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>On their own</h2>
<p><a href="https://doi.org/10.1007/s13524-019-00791-5">Our study</a> focused on low-income unmarried mothers, who are most likely to get the EITC.</p>
<p>Using information from <a href="https://www.census.gov/programs-surveys/cps.html">two large</a> <a href="https://www.census.gov/programs-surveys/acs">U.S. Census datasets</a> and <a href="https://fragilefamilies.princeton.edu/documentation">a study of low-income families</a>, we examined whether policy expansions - both federal- and state-level changes in the EITC - affected mothers’ housing.</p>
<p>Essentially, we calculated the average EITC each unmarried mother with a certain number of children could expect to receive in a particular state in a given year.</p>
<p>We then compared similar families before and after EITC expansions to estimate the effects on their housing. By using data that covered a 26-year period, we captured many changes in EITC policy at the federal and state level.</p>
<p>We found that getting additional money from the EITC reduced mothers’ housing cost burdens, or the share of their earnings that was spent on rent. In other words, the EITC helped make housing more affordable.</p>
<p>We also found that getting a larger EITC led mothers to move out of shared living arrangements where they were living with other adults who were not their partner.</p>
<p>Better still, after getting a higher EITC, these mothers were more likely to move into a home with their name on the lease or mortgage.</p>
<p>Owning or renting a home rather than living with someone else leads to <a href="https://doi.org/10.1080/14616718.2014.961753">more stable housing</a>, which is generally better for children because <a href="https://doi.org/10.1111/cdev.12105">studies show</a> that frequent moves, <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1741-3737.2012.01008.x">which are more common when people live with others</a>, are linked with poorer school outcomes.</p>
<p>Because these mothers were no longer doubled up, they were also less likely to live in a crowded household, which is also <a href="https://doi.org/10.1007/s13524-016-0467-9">better for children</a>.</p>
<h2>A number of proposals</h2>
<p>Overall, our study suggests that expanding the EITC might be an effective way to combat some pressing housing issues. But increasing it won’t fix all housing problems. </p>
<p>Our study also found that EITC expansions had no effect on homelessness or eviction, likely because families cannot get the EITC if they are not working. </p>
<p>Currently, there are a <a href="https://www.axios.com/cory-booker-2020-election-tax-policy-economic-plan-f51388bc-93ab-4b0b-a590-2404f44283c6.html">number</a> of <a href="https://khanna.house.gov/media/press-releases/release-sen-sherrod-brown-and-rep-ro-khanna-introduce-landmark-legislation">policy</a> <a href="http://nationalacademies.org/hmd/Reports/2019/a-roadmap-to-reducing-child-poverty.aspx">proposals</a> to expand the EITC. These proposals aim to combat poverty and reduce economic inequality.</p>
<p>As our study suggests, the EITC just might also help families improve their housing too.</p>
<p>[ <em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/120050/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Natasha Pilkauskas has received funding from Poverty Solutions and from the Institute for Research on Poverty to study the effects of the EITC on various outcomes. </span></em></p>The Earned Income Tax Credit was established in 1975 to reduce payroll taxes and help with rising prices for low-income families. Today, it could help poor families with housing.Natasha Pilkauskas, Assistant Professor of Public Policy, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1077622018-12-05T11:41:14Z2018-12-05T11:41:14ZMedicaid work requirements: Where do they stand after the blue wave?<figure><img src="https://images.theconversation.com/files/248191/original/file-20181130-194925-klh28.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Laura Kelly, governor-elect of Kansas, was part of the blue wave in November. Kelly, shown here in October, opposes Medicaid work requirements. </span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Election-2018-Kansas-Governor/41792ac188b248268427536a6a36260d/1/0">AP Photo/John Hanna</a></span></figcaption></figure><p>The <a href="https://theconversation.com/the-votes-have-been-counted-the-results-are-mostly-in-whats-next-for-health-care-106574">2018 midterm elections</a> have dealt a significant setback to President Trump’s agenda in the <a href="https://read.dukeupress.edu/jhppl/article-abstract/43/2/271/133583">legislative arena</a>. </p>
<p>However, there are still many ways for the Trump administration to keep swinging away at the <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1541-0072.2012.00446.x">Affordable Care Act</a>. One particularly effective unilateral instrument is the <a href="https://www.cambridge.org/core/journals/american-political-science-review/article/influence-and-the-administrative-process-lobbying-the-us-presidents-office-of-management-and-budget/638F34BC73235AB4833C852B24C431AF">regulatory process</a> – that is, the <a href="https://academic.oup.com/jpart/article-abstract/28/4/475/5056341">implementation of statutory law by executive agencies</a>.</p>
<p>This may prove particularly consequential for <a href="https://read.dukeupress.edu/jhppl/article-abstract/40/2/281/13726">Medicaid</a>, the health coverage program for those with low incomes or disabilities. One particular area of attention for scholars like me is <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">so-called community engagement or work requirements for Medicaid beneficiaries</a>. These mandates generally require beneficiaries to conduct work-related activities or lose coverage. </p>
<p>While still in litigation, the Trump administration has indicated its <a href="https://www.fiercehealthcare.com/payer/hhs-alex-azar-medicaid-work-requirements-hipaa-heritage-foundation">strong commitment to moving forward with these efforts</a>. </p>
<p>Helping individuals leave poverty is a worthwhile cause. As someone who studies health policy, I am concerned, based on research that others and I have conducted, that the focus of the Trump administration is misplaced. Indeed, their actions <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">run counter to a broad scholarly consensus</a> which universally emphasizes the benefits of health coverage. Most critically, they may disproportionately affect populations with vulnerabilities.</p>
<h2>Work for coverage: What the evidence from welfare reform tells us</h2>
<p>Work requirements have been implemented in a variety of public assistance programs outside of Medicaid. They have been featured most prominently in the <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">Temporary Assistance for Needy Families program</a>, or what Americans generally refer to as “welfare.” </p>
<p>When President Clinton and a Republican Congress <a href="https://www.theatlantic.com/business/archive/2016/04/the-end-of-welfare-as-we-know-it/476322/">“ended welfare as we know it”</a> in 1996, they imposed strict work requirements and time limits for beneficiaries. The resulting changes can only be described as transformational. Importantly, they include a <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">dramatic decline in the nation’s welfare case load</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/248192/original/file-20181130-194938-1mjspcu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Many people on Medicaid work, and many of those who do not wish they could find a job.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/construction-worker-285300212?src=L4ApcCx22gSFt9k1fBS-Eg-1-14">Zoran Orcik/Shutterstock.com</a></span>
</figcaption>
</figure>
<p>Proponents of work requirements have <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">hailed these developments</a> as vindication of the policy. More deliberate assessments, however, have raised questions about this interpretation. </p>
<p>For one, there is strong evidence that a significant reduction in caseload was a result of the <a href="https://www.hsdl.org/?view&did=751040">strong economy in the late 1990s</a>. The reduction also coincided with the <a href="https://www.urban.org/sites/default/files/publication/61306/310282-How-Are-Families-That-Left-Welfare-Doing-.PDF">expansion of the Earned Income Tax Credit</a>, which made work more profitable for low-income earners. Additionally, a major portion of the reduction of the welfare load has been the <a href="https://www.brookings.edu/research/from-welfare-to-work-what-the-evidence-shows/">result of eligible individuals merely being diverted from the program</a>. </p>
<p>When it comes to the experience of people who benefit from Medicaid, more causes for concern emerge. Indeed, <a href="https://www.macpac.gov/wp-content/uploads/2017/10/Work-as-a-Condition-of-Medicaid-Eligibility-Key-Take-Aways-from-TANF.pdf">most employment and income gains have proven ephemeral</a>. </p>
<p>Individuals who were subject to work requirements generally <a href="https://www.brookings.edu/research/from-welfare-to-work-what-the-evidence-shows/">found only entry-level, low-paying jobs</a> without <a href="https://www.cbpp.org/research/poverty-and-inequality/work-requirements-dont-cut-poverty-evidence-shows">benefits</a>. </p>
<p>Moreover, employment is <a href="https://www.brookings.edu/research/from-welfare-to-work-what-the-evidence-shows/">often impermanent and therefore highly unstable</a>. </p>
<p>Critically, beneficiaries have also <a href="https://www.cbpp.org/research/poverty-and-inequality/work-requirements-dont-cut-poverty-evidence-shows">failed to transition into better-paying jobs over time</a>. As a result, they continue to <a href="https://www.urban.org/sites/default/files/publication/61306/310282-How-Are-Families-That-Left-Welfare-Doing-.PDF">struggle with housing and food security</a>. </p>
<p>Studies have found <a href="https://www.brookings.edu/research/from-welfare-to-work-what-the-evidence-shows/">no hard evidence for sustained reductions in poverty</a>.</p>
<p>And certain populations faced particularly negative impacts. These include those with significant employment barriers such as <a href="https://www.brookings.edu/research/from-welfare-to-work-what-the-evidence-shows/">chronic health conditions, low job skills, and low education status</a>. </p>
<p><a href="https://www.urban.org/sites/default/files/publication/95566/work-requirements-in-social-safety-net-programs.pdf">Minorities</a> appear to also be disproportionately affected. The same holds for those <a href="https://www.kff.org/medicaid/issue-brief/medicaid-enrollees-and-work-requirements-lessons-from-the-tanf-experience/">suffering from addiction or domestic violence</a>. </p>
<p>Perhaps of greatest concern is evidence that for a significant portion of those beneficiaries forced off public assistance the result has been <a href="https://www.cbpp.org/research/poverty-and-inequality/work-requirements-dont-cut-poverty-evidence-shows">a slide into deep and persistent poverty</a>.</p>
<h2>Work requirements and the Trump administration</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/248193/original/file-20181130-194935-m1me3d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Pres. Trump speaking at a rally in Wilkes-Barre, Pennsylvania, Aug. 2, 2018.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/wilkesbarre-pa-august-2-2018-president-1148319818?src=bIJn1M8li9AMc_Cs5-tArQ-1-8">Evan El-Amin/Shutterstock.com</a></span>
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<p>Since taking office, the Trump administration has sought to aggressively introduce work requirements into the <a href="https://read.dukeupress.edu/jhppl/article-abstract/40/2/281/13726">Medicaid program</a>. It has argued that doing so would <a href="https://thehill.com/policy/healthcare/408724-trump-administration-defends-medicaid-work-requirements-after-coverage">“put beneficiaries in control with the right incentives to live healthier, independent lives.” </a></p>
<p>It has done so using so-called <a href="https://www.kff.org/medicaid/issue-brief/section-1115-medicaid-demonstration-waivers-the-current-landscape-of-approved-and-pending-waivers/">1115 demonstration waivers</a>. These waivers allow states to make temporary changes to their Medicaid programs that omit certain <a href="https://www.cambridge.org/core/journals/journal-of-policy-history/article/inching-toward-universal-coverage-statefederal-healthcare-programs-in-historical-perspective/E94A03DD1F60F9DCBE3DDE9728DA3224">statutory requirements</a>. </p>
<p>These waivers have been traditionally used by both parties to expand, not reduce, coverage.</p>
<p>As a result, the Center for Medicare and Medicaid Services has received more than a dozen waiver requests seeking to implement work requirements from states like <a href="https://www.kff.org/medicaid/issue-brief/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/">Kentucky, Arkansas and Michigan</a>. Proposals <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">differ significantly</a> between states in terms of such characteristics as work effort required, what activities count toward compliance and exemptions.</p>
<p>Yet due to <a href="https://www.kff.org/medicaid/issue-brief/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/">legal issues</a>, the only program currently operational is in <a href="https://www.kff.org/medicaid/issue-brief/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/">Arkansas</a>.</p>
<p>The <a href="https://www.apnews.com/d9d0613c59a2481a953074177c33170f">experience in Arkansas</a> appears emblematic for many efforts to impose work requirements. In particular, it illustrates what appears to be a deliberate attempt to reduce enrollment, rather than to help people leave poverty. </p>
<p>Work requirements, as implemented in Arkansas, are particularly concerning because they impose several significant burdens. One of these that has raised particular concern is <a href="https://www.healthaffairs.org/do/10.1377/hblog20180904.979085/full/">the requirement that Medicaid recipients report compliance of their work requirements solely to an online portal</a>. No provisions are made for beneficiaries to report in person, on paper or via phone. This is in a state that ranks at the <a href="https://www.citylab.com/equity/2018/08/arkansas-medicaid-work-requirements-online-reporting/567589/">bottom nationwide</a> when it comes to internet access. </p>
<p>Moreover, the portal is offline for a significant number of hours each day. There have also been no efforts to support beneficiaries’ work efforts such as job training, child care assistance or transportation allowances. </p>
<p>And indeed, early experiences confirm many of the fears of advocates and scholars alike, as <a href="https://www.healthaffairs.org/do/10.1377/hblog20180904.979085/full/">thousands of Arkansans have already lost coverage</a>. </p>
<p>Many of those losing coverage may have lost coverage not because of failure to work but instead <a href="https://www.healthaffairs.org/do/10.1377/hblog20180904.979085/full/">because they were unable to report their work efforts</a>.</p>
<h2>Supporting work instead of taking away health coverage</h2>
<p>Proponents of work requirements argue that <a href="https://www.wsj.com/articles/are-medicaid-work-requirements-a-good-idea-1529892000">requiring people to work will make them healthier and more economically secure</a>. Accompanying this argument is the assertion that many beneficiaries are willfully choosing not to work. Thus, beneficiaries have to be pushed into the workforce by a paternalistic government.</p>
<p>However, this line of argument runs counter to the <a href="https://publichealth.gwu.edu/sites/default/files/downloads/HPM/Kentucky%20Medicaid%20Proposed%20Amici%20Curiae%20Brief.pdf">expert consensus</a> that has emerged. Indeed, most scholars emphasizes the strong, positive effects that sustained health coverage has in supporting the work efforts of people who receive benefits. Taking away medical coverage runs contrary to the goal of alleviating poverty and transitioning Medicaid beneficiaries into stable work environments. </p>
<p>Blaming <a href="https://www.prb.org/majority-of-people-covered-by-medicaid-and-similar-programs/">Medicaid beneficiaries</a>, most of whom are indeed working, taking care of family members or disabled, for not working misses many of the subtleties of the underlying problems. Many beneficiaries face personal and systemic barriers such as lack of education, transportation or economic opportunity. <a href="https://www.dropbox.com/s/7ogsghmra0tdjbz/Haeder%20WV%20Medicaid%20Work%20Requirements%20Public.pdf?dl=1">Many are unable</a> to find long-term, stable jobs with health benefits despite their best efforts.</p>
<p>Yet, the effects of work requirements go well beyond the population targeted by them. Perhaps most concerning, work requirements may cause significant harm to populations with vulnerabilities such as minorities, the disabled and the chronically ill. Confusion, lack of information and the stresses of living in poverty may prove overwhelming. The results may be disenrollment. This holds even for <a href="https://wvpolicy.org/wp-content/uploads/2018/11/WV-Medicaid-Work-Requirements-Report.pdf">those who are technically exempted from work requirements</a>.</p>
<p>Unfortunately, this may not be a glitch but may point to the true underlying rationale. That is, the true goal for many supporters of work requirements may be the disenrollment of large numbers of beneficiaries, reductions in government expenditures and ultimately a disengagement from the social safety net. </p>
<p>Despite these concerns, one should not ignore the valid concerns of many working low- and middle-income Americans who are working and struggling. </p>
<p>I believe what the U.S. truly needs are policies that provide equitable opportunities for all Americans. A particular focus should be on offering access to affordable health care and education, and <a href="https://wvpolicy.org/wp-content/uploads/2018/11/WV-Medicaid-Work-Requirements-Report.pdf">policies that encourage, support and reward work</a>. Proven policy solutions to do this include expanding the Earned Income Tax Credit and providing access to affordable health care and educational opportunities. </p>
<p>Scholars play an important role in this process by informing policy choices with empirical evidence. We are also tasked to stand up and point out when our work is misrepresented in the political process. Finally, we have to be particularly mindful of those with vulnerabilities.</p><img src="https://counter.theconversation.com/content/107762/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon is a Fellow in the Interdisciplinary Research Leaders Program, a national leadership development program supported by the Robert Wood Johnson Foundation to equip teams of researchers and community partners in applying research to solve real community problems.</span></em></p>Republicans have sought to limit Medicaid, and a key component of those efforts is requiring that those who receive Medicaid benefits work. But many already do, and others can’t, a scholar explains.Simon F. Haeder, Assistant Professor of Political Science, West Virginia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/703812017-05-10T01:34:21Z2017-05-10T01:34:21ZWill Trump give working families a break?<figure><img src="https://images.theconversation.com/files/168132/original/file-20170505-19145-1dgcr43.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Families benefit when fathers and mothers get paid parental leave.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/barretthall/3469064980/in/photolist-6hxSab-79vjrz-c7Mki7-8fMUN3-8fJENc-fGCAkj-29kbuV-8qeQ2f-c3oc5y-kWePq3-3ia1Y-8PCwt2-eS8tBj-7xDV-c3or9L-9NzGHk-dqxZsc-6Jzq5p-TMP61S-dVJHxm-57YAz2-ktVpoC-c3nXYb-asSvV-8Z21eZ-8Z21QD-mbqWmb-6fCcbx-8Z56cd-8dStd6-8Z55y7-8Z22Eg-6GD7fW-kcKSw1-egzd6o-bVsGJS-JKbV8w-9NADTg-9Nzvw2-9NsZV7-fkrsZ3-9NB42k-cC4Eaj-PVPT-8tkSt9-ju8T3E-6zHp33-gXerS-5csRjx-9NDHad">popofatticus/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Federal Reserve Chair <a href="https://www.federalreserve.gov/newsevents/speech/yellen20170505a.htm">Janet Yellen</a> recently summed up the economic benefits of widespread child care and paid family leave. Since 1979, she explained in a speech at Brown University, women have brought about most gains in real household income. Making life easier for working moms helps women enter and stay in the workforce and in turn boosts economic growth, Yellen reasoned.</p>
<p>As an economics professor who researches issues that working women face, I couldn’t agree more. When more women earn income their own families benefit – along with the whole economy. And I’m heartened to see that after its initial proposal for a child care tax break that would mainly <a href="https://www.fastcompany.com/3068631/why-trumps-child-care-and-paid-leave-plan-are-fundamentally-flawed">benefit the rich</a>, the Trump administration has switched gears. It now seeks to bring relief to working families <a href="http://www.slate.com/blogs/xx_factor/2017/04/26/in_response_to_criticism_of_his_regressive_child_care_plan_trump_considers.html">farther down the economic ladder</a>.</p>
<p>According to <a href="https://www.washingtonpost.com/news/wonk/wp/2017/04/25/trump-changes-course-on-childcare-benefit-after-criticism-he-would-mainly-help-well-off-families">media reports based on skeletal details</a>, officials want to increase the Child and Dependent Care Credit, which lets <a href="http://www.taxcreditsforworkersandfamilies.org/federal-tax-credits/child-dependent-care/">working parents deduct up to US$2,100</a> from their taxes. That’s the kind of fix that would make our economy friendlier toward working moms as Yellen prescribed.</p>
<h2>More women working outside the home</h2>
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<p>The nation’s workforce has changed dramatically since the 1950s. Back then, workplaces generally centered around male breadwinners. Stay-at-home wives did most of the caregiving. </p>
<p>In a majority of families with children today, <a href="https://www.bls.gov/opub/reports/womens-databook/archive/women-in-the-labor-force-a-databook-2015.pdf">both partners earn money</a>, do housework and <a href="http://www.pewsocialtrends.org/2015/12/17/parenting-in-america">take care of their kids</a>. Families with children have become less likely to live with extended family members able to pitch in with caregiving and more likely to be headed by single parents. In 2013, <a href="http://www.pewsocialtrends.org/2013/05/29/breadwinner-moms/">the sole or primary earner</a> was the mother in nearly 40 percent of households with children.</p>
<p>On top of the time burden, child care costs are growing. <a href="https://www.care.com/media/cms/pdf/FINAL_Care_Report_09-27-2016.pdf">Full-time care</a> for kids under four years old ran $9,589 on average in 2015 – more than the tab for in-state college tuition, according to a report from Care.com, the largest online care market, and the New America Foundation, a think tank.</p>
<p>Another burden: The U.S. is the only industrialized nation <a href="http://www.politifact.com/truth-o-meter/statements/2016/jul/25/kirsten-gillibrand/yes-us-only-industrialized-nation-without-paid-fam/">without paid family leave</a> for employees with newborns. The Family and Medical Leave Act of 1993 covers only workplaces with more than 50 employees. It guarantees unpaid time off. </p>
<p>Some companies <a href="https://www.wsj.com/articles/wall-street-perk-parental-leave-1448927064">voluntarily offer</a> new mothers and fathers paid parental leave to care for newborns and newly adopted children. Others provide paid family leave for whatever emergency arises. </p>
<p>Unfortunately, <a href="http://www.npr.org/2013/02/05/171078451/fmla-not-really-working-for-many-employees">many workers can’t even take unpaid leave</a> without jeopardizing their jobs.</p>
<h2>Child care</h2>
<p>On top of the Child and Dependent Care Credit, the federal government <a href="http://www.nationalreview.com/article/443654/child-care-paid-leave-reforms-trump-administration-congress">helps working parents save on</a> child care expenses by allowing companies to let employees use dependent-care <a href="http://www.bankrate.com/finance/taxes/irs-can-help-you-look-after-the-kids-1.aspx">flexible spending accounts</a>.</p>
<p>These FSAs help middle- and high-income workers more than low-earners with little or no tax liability – whose need for help is greater. For them, there’s the Earned Income Tax Credit. Its distribution as an annual lump sum, averaging in most states <a href="https://www.eitc.irs.gov/EITC-Central/eitcstats">between $2,000 and $3,000</a>, is ill-suited for the <a href="http://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit">cash-strapped families</a> scrambling to pay their bills year-round who are eligible for this benefit.</p>
<p>After experiencing <a href="http://www.taxpolicycenter.org/sites/default/files/publication/138781/2001170-who-benefits-from-president-trumps-child-care-proposals.pdf">widespread push-back</a>, the Trump administration recently said it would revise <a href="https://www.bloomberg.com/politics/articles/2017-02-23/ivanka-trump-is-pushing-her-500-billion-child-care-plan-on-hill">its initial proposals</a> to do more for low-income parents with limited tax liability or who pay no taxes at all. It also outlined plans for new child care and elder care savings accounts that included few details. </p>
<p>Earlier this year, The New York Times reported that the Trump administration was “contemplating” changes to its <a href="http://example.com/https://www.nytimes.com/2017/03/11/us/politics/ivanka-trump-women-policy.html?_r=0">original maternity leave proposal</a>. By giving new mothers six weeks of paid time off, even that plan would set an important precedent. But it would exclude adoptions and many increasingly common new configurations for <a href="https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/trump-paid-parental-leave-.aspx">American families</a>.</p>
<p>The Trump administration should ensure that all workers benefit from family-friendly tax and employment policies, not just high-paid earners and new mothers. Men and women alike should be free to take paid family leave, and all employees needing to care for their close relatives deserve an opportunity to do so without losing their jobs or obliging more women to <a href="https://www.americanprogress.org/issues/economy/reports/2013/12/12/81036/the-economic-benefits-of-family-and-medical-leave-insurance/">stay out of the labor force</a>.</p>
<p>Maximizing “women’s presence in the workplace … allows us to capitalize on the talents of our entire population,” as Yellen said. “It is also good business.”</p><img src="https://counter.theconversation.com/content/70381/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cheryl Carleton does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The nation needs a more comprehensive approach to family leave and relief for parents with child care expenses. But the proposals the Trump team rolled out initially fell short.Cheryl Carleton, Assistant Professor of Economics, Villanova UniversityLicensed as Creative Commons – attribution, no derivatives.