Poverty & The 2016 Election Joel Schumacher MSU Extension Department of Agricultural Economics and Economics 1
What is Poverty? 2
What images do you think of when you think about Poverty? 3
Single Mom, 2 kids Rent Utilities Phone Food Health Insurance Daycare Car/Car Insurance Clothes Bozeman Budget 4
2016 Federal Poverty Guidelines Income Below Family of 1 $11,880 ($990 month) 28 hours/week at $8.05/hour 19 hours/week at $12/hour Family of 2 $16,020 ($1,335 month) 39 hours/week at $8.05/hour 25 hours/week at $12/hour Family of 3 $20,160 ($1,680 month) 48 hours/week at $8.05/hour 32 hours/week at $12/hour Family of 4 $24,300 ($2,025 month) 58 hours/week at $8.05/hour 39 hours/week at $12/hour 5
Income Included Earnings Unemployment Worker s Compensation Social Security & SSI TANF Veteran s Payments Survivor Benefits Pension/Retirement Income Interest Dividends Rents Royalties Trusts Education Assistance Alimony Child Support 6
Long Term Poverty Rate Graph 7
Poverty Rate Source: U.S. Census Bureau, American Community Survey 8
Poverty Rate by County 9
What issues or programs are relevant to those in Poverty? 10
Policies that impact the poor Income Taxation Justice System Housing Health Care Child Care Education Social Services Support Programs TANF, SNAP, LIHEAP, ETIC, Social Security 11
What are the candidates saying? The poor seem far down the list on the candidates agendas Robert Putnam, NY Times 8/18/16 The Millions of Americans Donald Trump and Hillary Clinton Barely Mention: The Poor Binyamin Applebaum, NY Times 8/11/16 12
What are the candidates saying? Help Americans find jobs Advocate for the Middle Class Change policies that benefit Wall Street not Main Street Boost Manufacturing Jobs Reduce taxes for working and middle income Americans 13
Trump Child Care Constitution/ 2 nd amendment Cyber Security Economy Education Energy Foreign Policy/ISIS Health Care Immigration National Defense Regulations Tax Plan Trade Veterans Affairs Clinton Economy Jobs Education Environment Health Justice & Equality National Security 14
Trump Child Care Constitution/ 2 nd amendment Cyber Security Economy Education Energy Foreign Policy/Defense Health Care Immigration Regulations Tax Plan Trade Veterans Affairs Clinton Economy Jobs Education Environment Healthcare Justice & Equality National Security 15
Poverty By Age Group 16
Social Security 17
Social Security and Poverty 18
Health Care & the Poor Clinton Supports Affordable Care Act Wants all States to expand Medicaid as part of ACA Double Funding for Primary Health care services at community clinics Trump Repeal Affordable Care Act Block Grant Medicaid to States 19
Affordable Care Act Highlights Individual Mandate to Buy Insurance Subsidies based on income Mandate for Employers with 50 Employees to provide insurance Expand Medicaid (State by State Decision) 30 have expanded Medicaid Can t deny based on pre-existing conditions Allow children to stay on parent s policy until age 26 20
Individual Subsidies Only Available for 100% to 400% of Federal Poverty Level 21
Montana HELP Act For Montanans with incomes up to 138% of the Federal Poverty Level Prior to HELP Act: Medicaid was limited Montanans around 54% or less of FPL. Targeted at Children, Disabled, and Parents Coverage Expanded January 1, 2016 About: 44,000 newly covered Average Premium: $26/month Uninsured in Montana: 2013: 195,000 (20%) 2015: 151,000 (15%) 2016: 76,000 (7.4%) 22
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Child Care 24
Example Single Mother, 2 Children (age 2 & 5) $12 hour, 32 hours per week = $20,000 Right at the Poverty Line for Family of 3 Annual Payroll Taxes: $1,528 Social Security Taxes: $1,238 Medicare Taxes: $290 Child Care Costs: $9,000 per year Average of $750 per month per child 25
Example: Current Law Mother Applies for Best Beginnings Scholarship State Run Program; Federally Funded Based on Income & family size Mother will have a $50/month co-pay $600 annual co-pay $8,400 from scholarship 26
Child and Dependent Care Tax Credit Eligible Child Care Expenses Maximum of $3,000 for 1 child or $6,000 for 2 or more. IRS Table: has a factor based on Income Between 20% and 35% Example: $3,000 x 25% = $750 Credit Non-Refundable 27
Child Tax Credit Max Credit Calculation based on Income $0 to $3,000 $0 credit $3,000 to $10,000 Max Credit of: 15% of income over $3,000 Example: $7,000 income = $600 ($7,000-$3,000) *.15 = $600 Example: $13,000 income = $1,500 (13,000-3,000) *.15 = $1,500 Credit Capped at $1,000 per child 28
Example: Current Law Adjusted Gross Income $40,000 $20,000 $7,000 Standard Deductions $17,400 $17,400 $17,400 Taxable Income $22,600 $2,600 $0 Tax before credits $2,728 $260 $0 Child & Dep. Care Credit (no refund) $1,980 $192 $0 Child Tax Credit $2,000 $2,000 $600 Tax Refund ($1,252) ($1,932) ($600) Change from Current Law Best Beginnings Scholarship $0 $8,400 $8,880 Child Care Costs $9,000 $600 $120 *max of $3,000 per child/max of $6,000 Factor from IRS Table 22% 32% 35% Child & Dep. Care Credit $1,980 $192 $42 Adjusted Gross Income $40,000 $20,000 $7,000 Refundable Calculation $5,550 $2,550 $600 15% of income after first $3,000 Max Refundable Amount (Child Tax) $2,000 $2,000 $600 29
Example: Clinton Plan No change to Block Grant/Scholarship Program Child Tax Credit is $2,000 per child (4 and under) $1,000 per child (5 to 12) Income Calculation for Credit: 45% of income $7,000 x.45 = $3,150 $13,000 x.45 =$5,850 = Capped at $2,000 or $1,000 per child 30
Example: Clinton Gross Income $40,000 $20,000 $7,000 Standard Deductions $17,400 $17,400 $17,400 Taxable Income $22,600 $2,600 $0 Tax before credits $2,728 $260 $0 Child & Dep. Care Credit $1,980 $192 $0 Child Tax Credit $3,000 $3,000 $3,000 Tax Due ($2,252) ($2,932) ($3,000) Change from Current Law $1,000 $1,000 $2,400 Best Beginnings Scholarship $0 $8,400 $8,880 Child Care Costs $9,000 $600 $120 Factor from IRS Table 22% 32% 35% Credit Calculation $1,980 $192 $42 Adjusted Gross Income $40,000 $20,000 $7,000 Refundable Calculation $18,000 $9,000 $3,150 45% of income, $2,000 (u4); $1,000 (5-12) Max Refundable Amount (Child Tax) $3,000 $3,000 $3,000 31
Example: Trump Plan No change to Block Grant or Child Tax Credit Move child care deductions to an above the line deduction Up to the average cost per child up to four children ($9,000 Montana average) Allow families with no income tax liability to get up to 50% of the lower wage earner s social security taxes added to their EITC 32
Example: Trump Gross Income $40,000 $20,000 $7,000 Standard Deductions $17,400 $17,400 $17,400 Taxable Income $22,600 $2,600 $0 Child Care Deduction $9,000 $600 Taxable Income $13,600 $2,000 $0 Tax before credits $1,378 $200 $0 Child & Dep. Care Credit: Eliminated Child Tax Credit (no change) $2,000 $2,000 $600 "EITC Boost" for Child Care $120 Tax Due ($622) ($1,800) ($120) Change from Current Law ($630) ($132) ($480) Best Beginnings Scholarship $0 $8,400 $8,880 Child Care Costs $9,000 $600 $120 Payroll Taxes Paid $3,056 $1,528 $537 50% of Payroll Taxes $269 33
Other Items Trump Child Care Savings Accounts Contribute up to $2,000 per year per child Includes unborn children Low income families will get a 50% match on the first $1,000 contribution Incentives to expand workplace based day care centers 6 weeks paid maternity leave Paid for and operated through the unemployment insurance program 34
Other Items Both Trump and Clinton want to make it easier to claim cost for day care from non-providers Cost for care by: Friends, Babysitters, Stay at home parents would be deductible Clinton: 12 Weeks of paid family leave Minimum 66.66% of wages while on leave No cost to businesses; paid by making the wealthy pay their fair share 35
Questions 36