Guest Blog Post: Don’t Raise Taxes on Low Income Hoosiers!
 |
| Image Credit: CTViewpoints |
By David Sklar
Assistant Director with the Indianapolis Jewish Community Relations Council and Chair of the Indiana Coalition for Human Services Public Policy Committee
The General Assembly is about to green-light a measure that
will cut credits and raise taxes on low income working families by $5 million
by 2027, but it doesn’t have to be that way. The Earned Income Tax Credit
(EITC) is a widely utilized, and extremely successful, tax benefit for low
income individuals that was originally created in the 1970’s and then expanded
during President Ronald Reagan’s tax reform efforts of the late 1980’s. In Indiana, working families with children
that have annual incomes below about $40,320 to $54,884 (depending on marital
status and the number of dependent children) are eligible for both a federal
and state EITC. The state credit is
simply the amount equal to 9% of their federal credit. That percentage is set statutorily by the
General Assembly, and while the state credit is a percentage of the federal
credit, the credits themselves are not officially coupled (this is important
and you’ll see why below).
The reason the EITC is so successful is that it is fully
refundable. This means that the credit,
which incentivizes work, can wipe out a family’s tax liability, and if any
credit remains will be provided to the taxpayer in the form of a tax return. This extra money in a family’s pocket is
often used for emergency expenditures, school supplies, household needs, etc.,
which can be the difference between making it and falling off a fiscal cliff
for low income Hoosiers. Nearly one
hundred percent of the dollars refunded to eligible families are pumped back
into our local economy, and the program itself has been supported by leaders of
both parties including President Obama and Speaker Paul Ryan who together
supported an expansion of the program as part of our economic recovery from the
Great Recession.
Unfortunately, Hoosiers who use the program are on the verge
of seeing a huge tax increase with the recent passage of the federal tax bill,
combined with the passage of House Bill 1316 during the special session of the
General Assembly this week. Tucked into
the federal legislation was a new way of calculating cost of living adjustments
for the federal EITC. This new method, called Chained CPI, will constrain these
adjustments so that they grow at a far slower rate than normal inflation. Among the various provisions of HB 1316,
which was drafted in large part to protect some of Indiana’s biggest and most
important companies from seeing large increases in their state tax liabilities
as we reconcile our tax code with the federal legislation passed by Congress
earlier this year, is a provision that will require Indiana to coincide with the
use of Chained CPI. The end result of
both the federal and state legislation will be a large tax increase on low
income Hoosiers who claim the EITC. The
Institute on Taxation and Economic Policy (ITEP) projects that in 2019 recipients
will lose $12 million in federal EITC and $700,000 in state EITC returns. The burden on Hoosiers continues to grow
exponentially and by 2027 they are projected to lose at least $86 million
federally and $5 million more from the state EITC. Although the state and federal governments
view any EITC expenditures not received by taxpayers as savings, make no
mistake, it is a tax increase on low income working Hoosiers, and a big one at
that. $91 million big.
But there are other options that Indiana isn’t considering.
Because Indiana’s credit is not officially coupled with the federal credit, as
mentioned previously, we do not have to utilize this new method of calculation for
the State’s EITC. Federally, low income
working Hoosiers are already projected to lose tens of millions of
dollars. There is little we can do about
that unless we can convince Congress to amend or repeal its most recent tax
legislation. But, we can do something
locally with regards to the state EITC. Another $5 million out of the pockets
of low income working Hoosiers, and local economies, is real money that cannot
be ignored. Unfortunately we at the
Indiana Coalition for Human Services were not able to convince lawmakers to
remove this provision from HB 1316, but it is our hope that we can work with
them over the summer and fall to find a solution to this problem, just as
Indiana’s largest employers were able to find solutions to their tax liability
problems in this legislation. We believe
there are a number of options that are worthy of consideration, and we look
forward to the opportunity to make our case.
When #INLegis picks summer study topics, will working families make the cut?
Legislative Council to Announce Interim Study Topics
During the legislative session, lawmakers advanced a number of potential areas for further study through bills and resolutions. Next Tuesday, May 15th, the Legislative Council will select topics for what is commonly referred to as “summer study.” These longer, more in-depth sessions allow legislators the time needed to explore pressing problems and their potential policy solutions. Often, they result in bill proposals for the following legislative session.With so many topics to choose from, the members of Legislative Council will need to be selective. As we saw last summer, important topics like paid family and medical leave won’t be assigned unless lawmakers hear from constituents.
Here’s how to ensure that topics addressing the needs of working families make the final cut:
In the list below, we highlight some of the topics lawmakers suggested this session that would shine a spotlight on the needs of working families. Is there one (or more) you feel strongly about? Contact the members of the Legislative Council and let them know. Is one of your lawmakers a member of the Council? Be sure to tell them you are a constituent! As you are crafting your message, be sure to tell them which topic(s) you want to be assigned to an interim study committee and why it matters to Hoosier families and communities.
Study topics, champions, and why the issue matters to working families:
- PAID FAMILY AND MEDICAL LEAVE (TALLIAN K) Why it matters: Family and medical leave provides time off from work to welcome a newborn or newly adopted family member, care for an ill or dying loved one, or tending to one’s own serious medical needs. Unfortunately, many families do not have paid time off during these important leaves, and many employers struggle to afford to provide larger stretches of leave. Other states have created programs to make paid leave available and affordable, and Indiana should explore these solutions.
- WORKFORCE FUNDING AND PROGRAMS (HUSTON T) Why it matters: The legislation passed so far to reorganize the state’s workforce programs has done little to reduce the barriers for low-income working adults to enter education and training programs. Studying whether the state should submit a 'Combined' WIOA plan to align the state's workforce programs across agencies would help unlock resources for supportive services for working adults such as transportation and child care.
- MENTAL HEALTH ACCESS (KIRCHHOFER C) Why it matters: Particularly focused on the opioid crisis, this suggested topic would urge the legislative council to study the impact that opioid treatment programs have on the neighborhoods and communities in the immediate area of the opioid treatment programs.
- BROADBAND GRANTS AND HIGH SPEED INTERNET SERVICE (OBER D) Why it matters: Some families and communities lack access to internet service. This topic would produce a report on this and other issues to the interim study committee on energy, utilities, and telecommunications before October 1, 2018.
- NUTRITIONAL ASSISTANCE (VANNATTER H) Why it matters: This topic would enable the legislature to more closely study eligibility verification and monitoring, identity authentication, and work requirements for participation in the federal Supplemental Nutrition Assistance Program and Medicaid program.
- STUDY OF PHARMACY DESERTS (BROWN C) Why it matters: This would provide a more solid grasp on what pharmacy deserts look like in rural and urban areas of Indiana and potential solutions.
- EDUCATION MATTERS (BEHNING R) Why it matters: This study would encourage the General Assembly to look at the adequacy of career counseling to students.
- WORKER'S COMPENSATION (FORD J) Why it matters: This study would look at the possibility of increasing the benefit schedules for worker's compensation and occupational diseases compensation.
Legislative Council Members:
Rep Brian Bosma | 317-232-9677 | H88@iga.in.gov |@Brian_Bosma
Sen. David Long | 317-232-9416 | Senator.Long@iga.in.gov | @INSenateGOP
Sen. Rodric Bray | 317-234-9426 | Senator.Bray@iga.in.gov | @bray_rodric
Sen. Jean Breaux | 317-232-9534 | S34@iga.in.gov | @SenJeanBreaux
Sen. Susan Glick | 317-232-9493 | Senator.Glick@iga.in.gov | @INSenateGOP
Sen. Randall Head | 317-232-9488 | Senator.Head@iga.in.gov | @Randy_Head
Sen. Timothy Lanane | 317-232-9427 | S25@iga.in.gov | @TimLanane
Sen. James Merritt | 317-232-9533 | Senator.Merritt@iga.in.gov | @Jim_Merritt
Sen. Karen Tallian | 317-232-9847 | S4@iga.in.gov | @SenKarenTallian
Rep. John Bartlett | 317-232-9987 | H95@iga.in.gov | @inhsedems
Rep. Timothy Brown | 317-232-9651 | H41@iga.in.gov | @tbrownmdrep
Rep. Terry Goodin | 317-232-9794 | H66@iga.in.gov | @terry_goodin
Rep. Linda Lawson | 317-232-0243 | H1@iga.in.gov | @inhsedems
Rep. Matt Lehman | 317-232-9677 | H79@iga.in.gov | @INHouseGOP
Rep. Kathy Richardson | 317-234-9380 | H29@iga.in.gov | @repkathykr
Rep. Gregory Steuerwald | 317-232-9833 | H40@iga.in.gov | @INHouseGOP
ACT TODAY - Farm Bill Will Result in SNAP Cuts
Friend of the Institute,
The House Committee on Agriculture passed a bill that will affect how federal hunger-fighting operates for years to come. It introduces HUGE cuts to important programs like the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) which last year helped feed 672,000 Hoosiers.
Cuts will come partly from a change in work requirements for segments of the SNAP population. Cuts are unacceptable. Your member of Congress needs to hear from you today: Stop this bill now.
Most of the people on benefits who can work, are working. Due to the nature of low wage work, work requirements put beneficiaries in a difficult position. If you can get enough hours to meet the work requirements, you may make just enough money to lose benefits, but not enough to support your family; on the flip side, not meeting them leads to the total loss of the benefit.
Programs like SNAP and Medicaid should not be subject to work requirements; food and adequate health care are basic necessities that should be available to our citizens when they fall on hard times or have barriers to employment.
Better ways to support work include:
- Increasing benefits and
reducing unintended benefit cliffs
- Providing voluntary and meaningful job
readiness services
- Providing voluntary and meaningful adult
basic education, skills training/industry credentials, and/or higher
education.
Warm regards,
Jessica Fraser
Executive Director, Indiana Institute for Working Families
Indiana’s Working Families More Likely to be Poor, Have Lower Incomes than Midwestern Neighbors
By Andrew Bradley, Senior Policy Analyst
Contact: abradley@incap.org (317) 638-4232
New data finds Indiana has the 19th-highest rate of working families who are low income (11th-highest among racial/ethnic minority families) but also 16th-lowest incomes.
Work should not only be honorable
and bring dignity, but should also pay for a family’s basic needs and provide
opportunities to continue on a pathway to long-term economic security. But new
data shows that a higher proportion of Indiana’s working families remain
low-income compared to our Midwestern neighbors, particularly Hoosiers of color.
Indiana’s per capita income also trails most neighbors, with income growth that
lags behind the national average suggesting that without a new policy direction,
working Hoosier families aren’t likely to catch up soon.
Contact: abradley@incap.org (317) 638-4232
A new policy
brief from the Working Poor Families Project finds that even with an
unemployment rate nearly as low as before the recession, the proportion of Indiana
families who are working or seeking employment and are also low-income remains well above the pre-recession rate.[1]
In 2016, 31.8% of all working Hoosier families were below 200% of the federal
poverty line, compared to 27.5% in 2007, when the state had only the 25th-highest
rate. Indiana’s rate of low-income working families now ranks 19th-highest
in the nation, above the U.S. median of 30.1% and above Illinois, Michigan, and
Ohio. Indiana’s leaders have touted a business-friendly policy focus, and the
state has set itself at the forefront for imposing new work requirements for social
service programs for the poor. But despite similar economic conditions and
costs of living, working Hoosiers are less likely than all neighbors except
Kentucky to earn enough to afford basic needs, much less build skills and grow assets
to thrive in the post-recession economy.
The brief finds working racial/ethnic
minorities are also more likely to be low-income in Indiana than those in
neighboring states, again except Kentucky. At 52.4%, Indiana has the 11th-highest
proportion of low-income working families of color in the U.S. Working African
American (54.2%) and Hispanic/Latinx (55.6%) Hoosier families are more than
twice as likely to be low-income than their white (26.7%) counterparts. As the
report finds “racial/ethnic minorities are not disproportionally low-income
because of a lack of work effort, but because they are more likely to be
working in low-paying occupations.” These occupations have dominated the
economic recovery, including service-sector jobs with few benefits and erratic
work schedules.[2]
And partly because Indiana has put fewer policy guidelines on this growing
sector of low-pay, low-quality jobs, the state’s proportion of low-income
working families has remained comparatively high a result.
It will take more than work, and
more than the policy status quo, for Indiana’s nearly 1 in 3 working poor
families to get relief from stagnant incomes. New data
from the U.S. Bureau of Economic Analysis shows that while Indiana’s income
rank improved from #35 in 2016 to #34 in 2017, we are still outranked by all
neighbors, again except Kentucky. Indiana’s per capita personal income of
$44,165 is now $6,227 below the U.S. median of $50,392. Hoosiers earn 88% of
the average American’s income, compared to 105% in Illinois, 90% in Michigan,
91% in Ohio, and 78% in Kentucky. Indiana’s income growth of 3% in 2017 was a
tick below the national average of 3.1%, and not enough to surpass its
Midwestern neighbors. And when taken together with high rates of low-income
working families, this incremental aggregate growth of the personal sector will
likely hold Indiana back unless its neighbors fall further by comparison.
With rates of incomes and working
poor families still lagging nearly a decade after the recession, Indiana can’t
wait for an invisible hand to help push us ahead of our neighbors. So how can the
state regain ground as a Midwestern leader and begin to compete in the U.S.
again? The WPFP brief recommends three steps to cut inequality: provide access
to skills training, affordable child care, health coverage, and paid sick
leave; enforce discrimination laws to reduce earning disparities; and expand
opportunities and tax incentives for retirement savings.
To get ahead, Indiana
should also abandon efforts to add more work requirement red tape to safety
net and work support programs, so long as the jobs on offer pay less than
what’s needed for self-sufficiency. The state must finally get competitive with
our neighbors and lose the low-road mindset, as the
General Assembly has left too many families treading water at best by
refusing to advance wage and job quality legislation. But until this happens,
there is much Governor Holcomb can do to take our economy ‘to the Next Level’
with a Good
Jobs economic development strategy that focuses on busting barriers to
training programs, linking employers and families with the supportive services
they need to connect, and rewarding potential employers who commit to a proven
high-road jobs strategy. Once Indiana takes these steps, it can claim a
rightful place as a state that works for all Hoosier families.
_________________________________________________
[1] The brief defines a family as working “if all family members ages 15 and older either have a combined work effort of 39 weeks or more in the prior 12 months, or all family members ages 15 and older have a combined work effort of 26 to 39 weeks in the prior 12 months and one currently unemployed parent looked for work in the prior four weeks."
[2] Beth
Jarosz and Mark Mather, “Low-Income
Working Families: Rising Inequality Despite Economic Recovery” Working Poor
Families Project, April 2018.
Indiana Receives “D” in Economic Status of Women - Again
 |
| Graphic via Institute for Women's Policy Research |
Indiana has
once again received a “D” for the economic status of women in the state, and still ranks dead last
among all states for work & family policies. The Institute for Women’s
Policy Research recently updated state grades and data from its Employment
& Earnings Index and Poverty & Opportunity Index, part of its Status of Women in the States series. States are currently
graded on six areas: Employment & Earnings; Political Participation;
Poverty & Opportunity; Reproductive Rights; Health & Well-Being; and
Work & Family. The data can be found on IWPR’s interactive website.
Indiana is once again in the
bottom third of states, earning a “D” overall. Its rankings on the two updated
grades - Employment & Earnings and Poverty & Opportunity – remained
unchanged: both D’s. Currently, Indiana’s highest grade is a C- in political
participation and its lowest is an “F” in work & family, where the state
ranks 51st overall. Indiana’s grade in this area is due in part to lack of
legislative support for policies like paid leave, elder and dependent care,
child care, and prekindergarten.
"The Indiana legislature has
yet to make improving women’s economic status a priority,” said policy analyst
Erin Macey. “It’s not surprising that we have seen no progress on these
measures.”
The report ranks Indiana #48 in
the nation for both Gender Wage Ratio and for Share of All Workers in Managerial
and Professional Jobs. In 2016, Indiana’s gender wage gap grew two percentage
points, as highlighted in the Indiana Institute for Working Families’ report Wages, Wealth, & Poverty: Where Hoosier Women Stand and Ways our
State Can Close the Gaps. The report also showed that women were
more likely to experience poverty than men.
A number of bills were offered
this year that might have improved women’s economic outcomes in the state.
These included improvements to Indiana’s equal pay law, workplace
accommodations for pregnant women, increases to the minimum wage, and a paid
family leave program. None received hearings.
Guest Blog: Unlocking Opportunity: New Occupational Licensing Law Opens Pathways to Jobs for People with Criminal Records
Nearly 1 in 4 Hoosier adults have an arrest or conviction record, but many occupations in Indiana currently have a blanket license ban that permanently locks out people with records, no matter how old or how unrelated the record is from the job at hand. The General Assembly just took a step to remove barriers to some of these licenses, but needs to do more to unlock opportunities to give returning Hoosiers a fair chance at family-sustaining jobs.
Nationwide, an estimated 70 million Americans have criminal records, and 1.19 million are Hoosiers. In 2015 alone, Indiana released 16,074 people from prison or jail. People with criminal backgrounds face many barriers to employment, and are often relegated to low-wage, low-skill jobs regardless of actual skill or ability. Obtaining quality employment provides the essential foundation a person needs to get back on track and reform their life.
Occupational licenses are the gateway for many vocations, a gate that is often locked shut for people with records. A 2016 study by the Alliance for a Just Society found that Indiana has 160 mandatory employment and licensing bans that prevent all individuals with criminal records from entering licensed, well-regulated career paths. Most of these blanket restrictions are mandatory lifetime bans and include licenses for: real estate brokers, engineers, plumbers, and soil scientists. HB 1245 was signed into law on March 21st by Governor Holcomb. HB 1245 reforms Indiana’s occupational licensing laws and brings them in line with suggestions from the National Employment Law Project (NELP). The new reforms will:
• Remove blanket restrictions, requiring that any restrictions be directly related to the crime.
• Place a five-year time limit on how long a person’s criminal record can be considered.
• Create a petition process and appeals process that allows people to check for restrictions prior to applying for licenses or investing in training. The process allows a person to appeal a denial and directs that the committee include considerations such as evidence of rehabilitation or treatment, time passed since commission of the crime, and the seriousness of the crime.
• Prohibit the use of vague terms such as “moral turpitude” or “good moral character” as licensing requirements. It also removes from consideration arrests not resulting in conviction.
Occupational licensing can lead to a 10 – 15% increase in income and can lift people out of low-wage jobs, improving the economic wellbeing of those who hold licenses. This highly-needed reform is a good first step to remove employment barriers, however Indiana can do more to ensure this population of the workforce is able to secure employment.
Unemployment rates are high for people with criminal records, with 60% of people who have been incarcerated still unemployed 1 year after release. Returning citizens work about half-time on average and earn an average of $10,714 annually (adjusted for inflation). This is below the federal poverty guideline for an individual, which is $12,140 and far below the wage needed for self-sufficiency, which for an individual adult in Indiana is $18,535.
The use of background screening for employment has become widespread, and many times screening takes place in the beginning stages of the interview process, disqualifying people before they have even had a chance to present themselves. Men with records have a 60% chance of receiving a call back, whereas women with records have a 30% chance. Online applications often require a person to ‘check the box’ if they have EVER been convicted of a crime. These applicants can then be screened out by a computer algorithm without a review by a hiring manager.
Last year, Governor Holcomb removed this ‘box’ from the application for state jobs. But Indiana can go further and take steps to ‘Ban the Box’ from all employment applications. This would help ensure people who have studied, obtained the proper training, and acquired the necessary skills and qualifications for a license, have the opportunity to receive an interview. A study investigating the effects of incarceration on employment found that the chances of a person with a record to receive a job offer increased six fold when the applicant was granted a face-to-face interview. Removing ‘the box’ gives people an opportunity to present their skills and qualifications directly to a potential employer and be considered on the merits of their ability to do the job. Clearing barriers to employment will help to reduce recidivism and open pathways to self-sufficiency for this often-over-looked population of Indiana’s workforce.
