A thin lifeline for low-income elderly and disabled Missourians who live in rental housing is close to breaking. Gov. Jay Nixon wants it snapped, and now the state Senate does, too.
By BARBARA SHELLY
The Kansas City Star
The circuit breaker tax credit helps senior and disabled citizens cope when rent increases swallow up too much of their income. Elderly and disabled homeowners get a similar break to hedge against rising property taxes.
Eliminating the renters credit would deprive 105,000 Missourians of a check worth an average of slightly more than $500 a year. By Missouri political standards that would barely qualify as a decent campaign contribution. But for people who must watch every penny, its a chunk of change that could repair a car, restock the medicine cabinet or keep the bill collectors away. It is a very big deal.
Over in Kansas, some lawmakers want to slash the states low-income tax credit by more than half. Although they propose shifting the money to property tax relief for elderly and disabled homeowners, the move would be another hit for working poor families, who have recently seen state government eliminate relief for child care expenses, sales taxes on groceries and onerous rent increases. Under a plan approved by the Senate, the average recipient would receive from $160 to $225 less from the state earned income tax credit.
People who claim the credit live paycheck to paycheck. A check for $160 could help send a child to a week at day camp, or replace the microwave.
One wonders what the late economist Milton Friedman, patron saint of the free market, would think of these moves. As Friedman is credited with saying, the main problem of the poor is that they have too little money. You dont need to create a create a host of government bureaucracies to pull them out of poverty, he reasoned. Just give them an appropriate amount of money and let them figure out what to do with it.
Friedman went so far as to propose a negative income tax, a cash transfer to every citizen based on income.
For different reasons, that idea was too much for conservatives and liberals. But in the 1970s it became the genesis of the federal earned income tax credit, which, when paid out as a refund at tax time, enables millions of low-income working families to stock up on necessities, repair homes and perhaps invest in education and training.
For a program that helps the poor, the EITC is remarkably uncontroversial. Thoughtful observers see that it works exactly as Friedman envisioned: Given a lump sum, people generally use it to improve their circumstances.
A year ago, Kansas Gov. Sam Brownback proposed eliminating the state earned income tax credit, but promised to capture some of the savings to run a state program for the poor. Coming from a governor aligned with small-government, free-market groups, that was a puzzler, the antithesis of Friedmans thinking. Someone may have gotten the word to Brownback because this year he wants to keep the state tax credit for the working poor.
Far be it from me to suggest what the legendary economist would have thought about the endangered programs in Kansas and Missouri. Perhaps he would have regarded state earned income tax credits and safety nets for low-income renters as steps too far.
But one neednt hold an economics degree to understand that a $500 check from the state of Missouri is money well spent if it helps an elderly person live independently. Or to lament that Kansas is reduced to shifting tax breaks for low-income working families to elderly and disabled homeowners, while leaders pursue their goal of giving the ultimate tax break zero income tax to the wealthy.
To reach Barbara Shelly, call 816-234-4594 or send email to firstname.lastname@example.org. Follow her on Twitter at bshelly.