Scoring Political Points Has High Costs for Taxpayers & Disadvantaged Wisconsinites
As I enjoy Thanksgiving and the rest of the holiday season, I hope I’ll remember the people who struggle to feed their families and need public assistance to meet basic food needs. Unfortunately, the state legislature is working on bills that will make it harder for some people to get public assistance, such as food stamps and unemployment benefits, and that will also be expensive for taxpayers.
No one wants to see any fraudulent use of public programs like unemployment insurance and food stamps (also known as SNAP nationally and in Wisconsin as FoodShare). Because there’s broad public support for eliminating “welfare fraud,” it’s good politics to make a show of fighting the misuse of benefits. Unfortunately, the political popularity of legislation that has the stated purpose of reducing fraud sometimes leads elected officials to pass ineffective welfare reform bills that have considerable cost to taxpayers and harmful effects for the people the programs are effectively serving. Read more
State policy choices contribute to the growing divide in income and wealth between the richest and poorest Wisconsinites. Although most parts of the state and federal tax codes and federal entitlement programs are adjusted (“indexed”) each year for inflation each year, Wisconsin programs that assist low-income households are less likely to be adjusted for inflation. The decision to freeze those forms of assistance means they are steadily eroded over time – to the detriment of struggling low-income workers and their communities.
A recent article by Chris Rickert in the Wisconsin State Journal contrasted the erosion of several forms of public assistance – including Wisconsin Works benefits, the Homestead Tax Credit, and the state minimum wage – with a proposal by some GOP members of the state legislature to periodically adjust campaign contribution limits for inflation. I was reminded of that article by two new reports issued late last week that shed more light on the effects of not adjusting the Homestead Tax Credit and Wisconsin Works: Read more
Congress has a chance this fall to save key provisions of the federal Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), two proven pro-work strategies that help working families make ends meet and provide the basics for their children.
If Congress does not act, 158,000 Wisconsin families with 301,000 children will lose some or all of their working-family tax credits, according to a new analysis by the Wisconsin Budget Project.
There is an effort underway in Congress to make several temporary corporate tax provisions permanent, and the debate is expected to come to a head this fall. Some federal lawmakers have advocated for letting these corporate provisions leap-frog over tax credits for working families instead of putting top priority this fall on saving key provisions of the federal EITC and CTC. Something similar happened during the last major tax debate, when these EITC and CTC provisions were only extended through 2017 but estate tax changes for wealthy families were made permanent. Read more
Wisconsin Should Do More to Build On This Success
The federal government made a big difference in the lives of struggling people in 2014, showing the powerful role governments can play in creating opportunity and helping people build a more secure future. An analysis of new data from the Census Bureau demonstrates the success of federal programs and underscores the need for Wisconsin to do more to build on that success through its own opportunity-expanding policies, such as increasing the minimum wage and reversing cuts to the state’s Earned Income Tax Credit.
Almost one in five Wisconsin children live in families that made so little in 2014 that they were below the federal poverty level, according to new Census Bureau data released last week – meaning that they couldn’t afford basic necessities. The poverty level is currently $11,770 for a single person and $24,250 for a family of four. Fortunately, key safety net supports are keeping millions from living in dire circumstances, something not captured in the official poverty measure. Read more
Wisconsin Needs to Make Investments that Help Put People on the Path to Economic Security
Many Wisconsin families continue to struggle to make ends meet, according to new figures released today. We have our work cut out for us to make sure that all Wisconsin families have the opportunity to build a better, more secure future for themselves.
Five years into the nation’s recovery from recession, Wisconsin’s working families remain considerably worse off than they were before. Nearly three-quarters of a million Wisconsinites lived in poverty in 2014, according to today’s release of new Census data, which is 150,000 more than in 2007. Poverty is more prevalent among children than adults, with about 1 in 6 Wisconsin kids in poverty last year. Read more
A new report issued in conjunction with the Labor Day weekend by COWS provides a thorough examination of Wisconsin job numbers, wages, poverty, and job quality, and it provides a sobering assessment of how working people in Wisconsin are doing:
“Wisconsin faces slow growth, extreme racial disparity in unemployment, long-term stagnation in wages, and one-fourth of workers struggling in poverty-wage jobs.”
The new COWS report – The State of Working Wisconsin 2015 – illustrates that as the national economy has gradually rebounded following the Great Recession, Wisconsin’s job growth has lagged behind. COWS’ analysis concludes that “if Wisconsin had enjoyed the same rate of job growth as the rest of the nation across the course of the recovery, the state would have 90,000 more jobs today.” The national growth rate from January 2011 through June of this year was 60% faster than the job growth Wisconsin experienced during that time.. Read more
Overtime provisions protect some workers who put in long hours, making sure that employees earn extra pay when they work overtime. But many low-paid salaried workers are not eligible to earn overtime pay, making it harder for those workers to climb the economic ladder. That could change under a new proposal that would raise the salary threshold under which workers are considered automatically eligible for overtime pay, a measure that would directly benefit nearly 200,000 workers in Wisconsin.
Current overtime pay rules protect most hourly workers, but leave out many low-paid salaried workers. The Economic Policy Institute explains :
“Salaried workers who earn below $455 per week, or $23,660 per year, are automatically eligible for overtime pay, regardless of the nature of their job or the duties they perform.
Salaried workers whose earnings are $455 per week or more can be exempted from the right to receive overtime if they fall into one of three categories: executives, administrators, and professionals.
By Siphoning off More TANF Funding to Pay for the EITC, Committee Undercuts Arguments Against Using Federal Funds
The Joint Finance Committee votes Thursday, May 21, on a wide range of Medicaid issues, including whether to expand BadgerCare and save upwards of $345 million that could help prevent deep cuts in higher education and other parts of the budget. The most frequent argument made by conservatives against capturing that federal assistance is that we shouldn’t accept federal funding that might not be secure. However, if you were carefully watching the Finance Committee’s budget votes last Thursday you would have gotten a very different perspective on the willingness of the majority party to accept federal funding.
There were at least two times last Thursday when the JFC voted to amend the Governor’s budget in ways intended to capture or utilize more federal funding. In one case (motion #345) the committee unanimously approved new standards that will make it easier for the Department of Children and Families to close child support cases. Read more
The Joint Finance Committee will vote Thursday on whether to divert more funds from the federal welfare reform block grant to help finance unrelated parts of the state budget. The amount of those funds transferred to the Department of Revenue (DOR) has already been increased dramatically in each of the last two budgets. $62.5 million per year from the Temporary Assistance to Needy Families (TANF) block grant is being used to replace state funding for the Earned Income Tax Credit (EITC), and that maneuver reduces the funding available for important programs to assist vulnerable low-income families.
According to a Legislative Fiscal Bureau paper (#215) , federal law would allow the state to transfer up to $12.3 million more to DOR in the next biennium, in order to back out state General Fund dollars for the EITC.
Optimally, legislators should decrease the use of TANF funding for the EITC, which is what the Department of Children and Families (DCF) proposed last fall in the budget request they submitted to the Department of Administration. Read more
The middle class is being hard hit all over the country, and Wisconsin’s middle class is taking the hardest hit of all. Wisconsin’s middle class, once nearly the strongest in the country, has shrunk more than in any other state.