Monday, February 14, 2005

EITC and food stamps make a difference

In her popular book Nickel and Dimed, Barbara Ehrenreich took a tour through the low-wage working life in America, and reached the unassailable conclusion -- it's difficult. But it always bothered me that she added an extra layer of difficulty by not including the Earned Income Tax Credit (EITC) or food stamps in her budget. There is no shame in taking either. The EITC is an annual payment from the IRS to low-wage working families with children. Food stamps reflect our national conviction that food should be an entitlement. By not participating in these programs, it almost seemed Ehrenreich expects her model low-wage workers to make a charitable contribution to Uncle Sam in addition to all their other burdens.

I was reminded of this recently when I saw the clever sheep weblogger's discussion of the Maryland Food Bank's online interactive role-playing tutorial, "Hunger 101." In this tutorial, you take the role of one of several characters, and try to feed your family on a very difficult budget. Try it -- it's impossible. But something doesn't add up.

The first character offered is Jennifer Hernandez, a 29-year-old mother of 2 young children, ages 2 and 5. Ms. Hernandez earns $360 monthly ("$310 after taxes," the tutorial says) and gets $340 monthly from cash assistance. In the interactive game, you can take her to the food stamp office to wait all day, only to find out that she is ineligible for food stamps. But I can't see why -- she is clearly income eligible, and her TANF participation makes her "categorically eligible" (i.e., asset limits or an automobile do not make her ineligible for food stamps).

Here is the real budget for Ms. Hernandez and her two young children, from the information given in the simulation:
$360 earnings from work
$144 Earned Income Tax Credit (see the Center on Budget's calculator)
$340 TANF
$319 Food stamps
$1163 per month

The USDA formula for food stamps gives her the following deductions from income, before her corresponding benefits are calculated: $72 for work-related costs like transportation, $134 standard deduction, and $177 to offset her high housing costs. Far from paying income taxes on her earnings, she would get an annual check from the IRS of $1730. Her budget is still awful difficult, but EITC and food stamps are important and hard-won programs, and it seems important to acknowledge their role.

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