According to the Census Bureau, 15.1 percent of Americans were reported to live in poverty in 2010, which was the highest level since 1993. This represented approximately 46.2 million Americans who have incomes below the poverty line. However, income alone cannot provide an accurate measure of poverty since it ignores the effects of government subsidies like the Earned Income Tax Credit, Medicaid, food stamp, and housing subsidies James Sullivan from National Poverty Center. For example, food stamps alone give $14 million worth of benefits per year, so the census fails to recognize the impact of food stamps program, which lifts many people out of actual poverty. On the other hand, people are spending a lot of more money on housing and transport
…show more content…
First, the current measure is based on pre-tax incomes even though tax policy has changed numerous times over decades. Pre-tax money income does not subtract taxes or include the EITC or noncash benefits such as food stamps, housing or school lunch subsidies, or public health insurance. These benefits play a significant role on both family income and consumption. Second, a definition of the family that is not based on who in the household share resources that unrelated children under age 15 like foster children are not even included in the measure. Most importantly, income-based poverty gaps have been rising over the last two decades as the census reports, while consumption-based gaps have fallen according to a research done by Bruce Meyer. His study shows the income-based poverty measure has declined 13.5 percent more than the consumption-based measure between the early 1960s and 2009. Overall, the official poverty rate based on income measurement is an inadequate and aged to capture consumption patterns of American …show more content…
First, the poverty line is important to effectively evaluate the need for social programs. Therefore, programs like the Earned Income Tax Credit (EITC), a refundable federal income tax credit, was expanded over the past few years to help low-income families. However, it brought little impact on reducing the poverty rate because low-income families often fail to claim credit and meet the general rules of eligibilities such as family size and filing status. This example shows how the poverty line can expand or limit the eligibility of low-income families for many federal assistance programs. Second, the consumption based poor are less educated, less likely to own a home, more likely to live in married parent families, and much less likely to be single individuals or elderly than the income poor. These factors can determine the degree of poverty and inequality and the benefits of expansion and elimination of policies such as immigration reform. Lastly, as I already have mentioned, housing and transportation are the largest categories of spending for low-income households. In fact, federal assistance policy toward low-income families based on consumption based poverty line would increase in areas like housing, utility, rent, gasoline, and public transportation subsidies. These
First, the current measure is based on pre-tax incomes even though tax policy has changed numerous times over decades. Pre-tax money income does not subtract taxes or include the EITC or noncash benefits such as food stamps, housing or school lunch subsidies, or public health insurance. These benefits play a significant role on both family income and consumption. Second, a definition of the family that is not based on who in the household share resources that unrelated children under age 15 like foster children are not even included in the measure. Most importantly, income-based poverty gaps have been rising over the last two decades as the census reports, while consumption-based gaps have fallen according to a research done by Bruce Meyer. His study shows the income-based poverty measure has declined 13.5 percent more than the consumption-based measure between the early 1960s and 2009. Overall, the official poverty rate based on income measurement is an inadequate and aged to capture consumption patterns of American …show more content…
First, the poverty line is important to effectively evaluate the need for social programs. Therefore, programs like the Earned Income Tax Credit (EITC), a refundable federal income tax credit, was expanded over the past few years to help low-income families. However, it brought little impact on reducing the poverty rate because low-income families often fail to claim credit and meet the general rules of eligibilities such as family size and filing status. This example shows how the poverty line can expand or limit the eligibility of low-income families for many federal assistance programs. Second, the consumption based poor are less educated, less likely to own a home, more likely to live in married parent families, and much less likely to be single individuals or elderly than the income poor. These factors can determine the degree of poverty and inequality and the benefits of expansion and elimination of policies such as immigration reform. Lastly, as I already have mentioned, housing and transportation are the largest categories of spending for low-income households. In fact, federal assistance policy toward low-income families based on consumption based poverty line would increase in areas like housing, utility, rent, gasoline, and public transportation subsidies. These