Creating Economic Mobility: Building Ladders out of Poverty 2016 U.S. Poverty Campaign Overview

2016 U.S. Poverty Campaigns Main Campaign- Creating Economic Mobility: Building Ladders out of Poverty Expand the Earned Income Tax Credit and Child Tax Credit Build awareness and support strategies to eliminate the racial wealth gap

Poverty in the U.S. Keeping Households out of Poverty The Supplemental Poverty Measure further accounts for critical anti-poverty programs that have kept many people out of poverty including tax credits (the EITC and CTC), and in-kind assistance programs such as SNAP, school lunch program and WIC. Add citation

Creating Economic Mobility: The Earned Income Tax Credit (EITC) The EITC: was designed to “make work pay”. is fully refundable, so if a family’s EITC exceeds the amount of federal taxes owed, the family receives the difference as a refund increases as earnings increase up to a certain income level, then gradually decreases. amount is determined by family size and composition Source: http://www.cbpp.org/research/policy-basics-the-earned-income-tax-credit

Why the EITC Works The EITC, together with the CTC, is the most effective federal anti-poverty program excluding Social Security. In 2013, the EITC lifted about 6.2 million people out of poverty, including about 3.2 million children. Additionally, it reduced the severity of poverty for 21.6 million other workers The EITC strengthens work and earnings in the next generation. Research has found that for children in low-income families, each additional $3,000 per year received before age 6 correlates with an average yearly increase of 135 work hours between the ages of 25 and 37, and their average annual earnings increase by 17 percent Here mention about poverty and brain development. Source: http://www.cbpp.org/research/policy-basics-the-earned-income-tax-credit

Why the EITC Works The EITC promotes work, especially among single mothers. The EITC expansions of the 1990s helped more than a half a million families move from cash welfare assistance to work. EITC children do better in school. Elementary and middle-school students earn higher test scores when their families receive larger refundable tax credits. The EITC strengthens local economies – it is estimated to generate $1.50 - $2.00 in economic activity for every $1 spent. Here mention about poverty and brain development. Source: http://www.cbpp.org/research/policy-basics-the-earned-income-tax-credit

Why the EITC Works Studies have found that families spend roughly half of EITC refunds on current consumption, such as groceries, child expenses, and furniture.  They spend the other half paying off past-due bills and debt, and for “asset-building” such as savings, education, or home ownership and home repairs.  Nearly two-thirds of families spend part of their refunds on expenses related to raising children, and about one-third made car purchases or repairs Source: http://www.cbpp.org/research/federal-tax/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens

The Child Tax Credit The Child Tax Credit (CTC): is a partially refundable federal tax credit designed to offset cost of raising children. requires a $3000 income minimum. is the largest tax provision benefitting families with children. protected approximately 3.1 million people from poverty in 2013, including about 1.7 million children, and reduced the severity of poverty for another 13.7 million people, including 6.8 million children. has a $1000 per child (under age 17) maximum Source: http://www.cbpp.org/research/policy-basics-the-child-tax-credit

Impact of EITC and CTC The EITC and CTC are our best defenses against a tax system that favors the extremely wealthy. Critical provisions to expand the EITC were set to expire in 2017 – it they did, more than 16 million people would be pushed into or further into poverty. Being best anti-poverty program with historically bipartisan support. ARRA (American Recovery and Reinvestment Act) expanded EITC amounts for filers

You helped ensure that Congress made the EITC and CTC provisions permanent! In notes: need to include history?

There’s still work to do. Working adults without dependents are the only group of people taxed into or further into poverty. It has been estimated that in 2015, a childless worker earning wages at the federal poverty line (estimated at $12,566 for 2015) would owe nearly $2,000 in federal taxes even after receiving the EITC Source: http://www.cbpp.org/research/letting-key-provisions-of-working-family-tax-credits-expire-would-push-16-million-people https://www.nationalpriorities.org/blog/2014/04/07/congress-extend-corporate-tax-breaks-not-unemployment-benefits/

Some Workers Are Still Taxed Into Poverty

Proposals to expand EITC Both proposals lower the eligibility age from 25 to 21 The Obama/Ryan proposal would lift an additional 2.1 million African American workers, nearly 3 million Latino workers, and more than 630,000 veterans out of poverty Compared to the numbers above, the Brown/Neal proposal lifts 2.6 African Americans, nearly 4 million Latino workers, and over 715,000 veterans out of poverty

Impact of EITC Expansion Community Number of workers benefiting from expanded EITC under Ryan/Obama expansion Number of workers without dependents not taxed into or further into poverty under Ryan/neal Number of workers benefiting from expanded EITC under Brown/Neal expansion Number of workers without dependents not taxed into or further into poverty under Brown/Neal African Americans 2.1 million 1.1 million 2.6 million 1.2 million Latinxs 2.9 1.3 million 3.8 million 1.6 million Veterans 630,000 192,000 716,000 216,000 Millennials 7 million 3.9 million 9 million 4.5 million Data from unpublished reports by CBPP and partners

We can’t only talk about income inequality… Source: http://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

…we need to talk about racial wealth inquality Source: http://apps.urban.org/features/wealth-inequality-charts/

The Racial Wealth Gap Communities of color are disproportionately affected by America’s wealth inequality and asset poverty. Data inequities for Asian and Native American demographics but here’s what we know: Less than 6/10 Native Americans and Asians own a home compared to 68% of Whites. Source: Center for Global Policy Solutions

Creating and Sustaining the Racial Wealth Gap with Policy 1) The founding of America Land-grabbing and slavery as forms of wealth 2) Home-ownership Redlining and restrictive covenants as examples of racial discrimination 3) Predatory lending The Great Recession 4) The consequences are still felt today. Racial wealth gap was created by public policy which leaves the conversation open to understanding government’s role in the issue rather than ascribing this to private, individual relationships. These patterns of racial segregation, discrimination, and exclusion occurred everywhere! The government created segregated public housing projects, as policy. It subsidized the development of suburban communities on the condition that they exclude black residents. It barred blacks from receiving government-backed mortgages, enforced neighborhood covenants barring black homeowners, and advised against integrating neighborhoods lest white property values fall. And it tacitly supported industry practices where real estate agents risking losing their licenses for selling homes to black families in white neighborhoods. Local zoning regulations, meanwhile, hemmed in black communities with the industrial development no one wanted. It permitted liquor stores, bars and polluting businesses in black neighborhoods but not white ones. Then when all these unwanted neighbors devalued the property of the blacks who lived in these communities, they were systematically denied mortgage insurance. Local governments, on top of this, increasingly ignored these communities with trash collection, street maintance and policing, devaluing them even more. "Even if there was no discrimination, even if everybody behaved perfectly, neutrally, with regard to race, we haven’t addressed the permanent structures that were set up by state-sponsored segregation in the past," Rothstein says. "They don’t disappear by themselves."

Wealth Inequality by Race and Ethnicity is Growing

Millions of Americans cannot afford a financial crisis Asset Poverty: Millions of Americans cannot afford a financial crisis Liquid asset-poverty: insufficient amount of readily accessible assets to live at the poverty level without income for three months. These households are vulnerable to falling into poverty after a job loss, large medical bill, or any other unanticipated financial crisis. This is also in the state fact sheets. Source: http://scorecard.assetsandopportunity.org/2013/measure/liquid-asset-poverty-rate

Asset Poverty and Wealth Inequality Households of color are far more likely to be affected by asset poverty The racial disparities in asset-building opportunities and wealth created by racially-motivated public policy and generations of racial discrimination The racial wealth gap has continued to marginalize communities of color. Nearly 44% of households are liquid asset poor, meaning they have less than three months of savings to cover expenses if they lose a job, face a medical emergency or are hit by some other unexpected income disruption Source: http://assetsandopportunity.org/scorecard/about/main_findings/ http://assetsandopportunity.org/assets/pdf/2016_Scorecard_Financial_Assets_Income_Report.pdf

Savings Disparities by Race and Ethnicity

Tax time savings African American households have $0.06 for every $1of wealth white households have (for Latinx households, it’s $0.07). One strategy to remedy this and build financial stability is to use tax time as a moment to build emergency savings. Tax policy should: make it easy for all taxpayers to save at tax time, provide incentives for those savings to accumulate quickly through matched funds, and ensure we are protecting consumers, we can foster economic mobility. Rainy Day EITC kinda bad – New America… Source: http://www.epi.org/publication/bp370-native-americans-jobs/ http://globalpolicysolutions.org/wp- content/uploads/2014/04/Beyond_Broke_FINAL.pdf

Payday Lending Targets Low-Income Communities of Color Payday loans and other forms of predatory lending cost families $8.7 billion a year in interest and fees, perpetuating the cycle of poverty Payday lenders are eight times more likely to be located in African American and Latino neighborhoods than in white neighborhoods Source: http://files.consumerfinance.gov/f/201503_cfpb-proposal-under-consideration.pdf