Politics of Poverty Exam 2: Taxes, Safety Nets, Education & Research

What is a progressive tax?

A tax where the tax rate increases as a person's income increases, with higher earners paying a higher percentage.

Give an example of a progressive tax.

Federal Income Tax, which uses tax brackets that scale upward with income.

What is a regressive tax?

A tax that takes a larger percentage from low-income earners than from high-income earners.

Give an example of a regressive tax.

Sales Tax or Payroll Taxes, which are flat percentages regardless of income.

What criteria are used to determine tax fairness?

Fairness is evaluated by balancing ability to pay and benefits received.

What is the effective tax rate?

The actual percentage of income paid in taxes, calculated by dividing total tax liability by total taxable income.

What is the Earned Income Tax Credit (EITC)?

A federal tax credit for low-to-moderate-income working individuals and couples, reducing tax owed and potentially resulting in a refund.

How does the EITC reduce poverty?

By supplementing earnings from work, it helps lift low-income working households above the poverty line.

What is the Child Tax Credit (CTC)?

A federal tax policy tool designed to help working families offset the costs of raising children by reducing income tax liability.

How do most European democracies handle child support compared to the U.S.?

They rely more on direct, recurring government cash transfers rather than tax credits like the CTC.

Are state taxes more progressive or regressive than federal taxes?

State taxes are generally much more regressive than federal taxes.

Why is the statement 'nearly 50% of citizens pay no taxes' incorrect?

It confuses federal income tax with all taxes, ignoring other taxes like sales and payroll taxes.

How can the statement about citizens paying no taxes be made correct?

Specify that 'nearly 50% of American households do not owe federal income taxes after deductions and credits.'

How have payroll taxes changed as a share of the federal budget over the past 60 years?

Payroll taxes are now a much greater share (roughly 30%) compared to under 15% 60 years ago.

How have corporate taxes changed as a share of the federal budget over the past 60 years?

Corporate taxes are now a smaller share (roughly 9%) compared to around 30% 60 years ago.

What problems did the US health care system face before major reforms?

Less than 6% of the market was covered, many older individuals were denied coverage, and prices varied widely.

What does Medicare cover?

Primarily older adults (65+) and certain younger individuals with long-term disabilities.

What does Medicaid cover?

Low-income individuals and families, including vulnerable populations like low-income children and pregnant women.

What is SCHIP?

The State Children's Health Insurance Program, covering low-income children whose families earn too much for Medicaid.

How is Medicare different from Medicaid?

Medicare is age-based and federally run, while Medicaid is income-based and administered at the state level.

What changes did Obamacare make to Medicaid?

Broadened eligibility to cover all adults with incomes up to 138% of the Federal Poverty Level.

What is the personal mandate in healthcare?

A rule requiring nearly all Americans to have health insurance or pay a tax penalty.

How do health care exchanges work?

Online marketplaces for consumers to shop for private health insurance and receive subsidies if eligible.

What are Health Care Exchanges?

Online marketplaces where consumers can shop for private health insurance, compare plans, and receive government subsidies if eligible.

What was the impact of eliminating the Individual Mandate Penalty on health insurance?

It made healthy people more likely to drop coverage, destabilizing the insurance pool and driving up premiums.

How do alternative or junk plans affect the ACA marketplace?

They pull healthier individuals out of the main marketplace, leaving sicker individuals behind and raising overall costs.

What is the 'coverage gap' in Medicaid expansion?

It refers to low-income adults who earn too much for traditional Medicaid but too little for marketplace subsidies.

What was the Supreme Court ruling in NFIB v. Sebelius regarding Medicaid expansion?

The ruling stated that while Congress could incentivize Medicaid expansion, it could not force states to adopt it.

What is the real-world impact of the coverage gap on individuals like Landon in Tennessee?

Individuals in the gap cannot afford essential medical needs like insulin, leading to severe health risks and debt.

Why is Social Security more important for younger generations?

Younger generations face fewer traditional pensions and must save more for their own retirement.

What evidence shows that Americans are not good at saving?

States are projected to face $334.3 billion in increased spending due to insufficient savings between 2021 and 2040.

What is a Defined Benefit Plan?

A retirement plan where the employer guarantees a fixed monthly payout for life, taking on all investment risks.

What is a Defined Contribution Plan?

A retirement plan where employees contribute to an investment account, with payouts depending on investment performance.

What are some reasons for Social Security's financial difficulties?

Fewer workers supporting retirees, aging baby boomers, longer life expectancy, and slow wage growth.

What is one proposed solution for Social Security's long-term solvency?

Raising the taxable portion of income could generate significant revenue over time.

What determines the amount of your Social Security check?

Your Primary Insurance Amount (PIA) is calculated based on your Average Indexed Monthly Earnings (AIME).

What should you ask about health insurance when offered a job?

Inquire about the types of insurance offered, costs, and when coverage begins.

What is the purpose of the SNAP program?

To provide financial assistance for groceries to low-income individuals and families, alleviating food insecurity.

How does SNAP usage relate to unemployment rates?

SNAP automatically expands during economic downturns, unlike TANF, which has fixed funding.

Why is SNAP considered an effective program?

It responds to economic changes, reduces food insecurity, supports the economy, and is simple to administer.

What makes SNAP a better safety net than cash assistance?

SNAP provides benefits to all who qualify, with federal funding increasing as need rises, unlike block grants.

What role does SNAP play in the economy?

It increases purchasing power for food, benefiting agricultural markets and local retailers.

What is the significance of the term 'entitlement' in the context of SNAP?

It means that SNAP provides benefits to all eligible individuals without a cap on funding.

What is the impact of aging baby boomers on Social Security?

As more baby boomers retire, there are fewer workers paying into the system, increasing financial pressure.

How does slow wage growth affect Social Security funding?

Slow wage growth leads to less tax revenue, which is primarily how Social Security is funded.

What is the potential benefit of raising the retirement age for Social Security?

Raising the retirement age could save significant amounts in benefits over time.

What is the role of undocumented immigrants in Social Security funding?

Undocumented immigrants contribute to Social Security through taxes but do not receive benefits.

What is the significance of the sliding-scale tax subsidies in the ACA?

They help make health insurance more affordable for lower- and middle-income families.

What happens when states choose not to expand Medicaid?

It creates a coverage gap for low-income adults who cannot access affordable health care.

What are junk plans in the context of health insurance?

Less regulated plans that offer limited coverage and can destabilize the insurance market.

What is the effect of financial volatility on ACA enrollment?

Changes in financial assistance can lead to decreased affordability and lower enrollment rates.

What does SNAP stand for?

Supplemental Nutrition Assistance Program

How does SNAP funding differ from TANF?

SNAP funding increases with the number of people needing help, while TANF has a fixed amount of money.

What is a major advantage of SNAP's eligibility rules?

SNAP has broader eligibility rules and uses EBT cards, making it easier to access.

What is the lifetime limit for TANF benefits?

TANF has a federal 5-year lifetime limit.

How does SNAP respond to economic downturns?

SNAP automatically helps more people when unemployment and poverty increase.

What recent reform requires more adults to work to receive SNAP benefits?

Stricter work requirements mandate that more adults without children must work or participate in an approved work program for at least 20 hours a week.

What changes have been made to non-citizen eligibility for SNAP?

Fewer non-citizens qualify for SNAP, with certain groups like refugees no longer eligible based on their immigration status.

What additional responsibilities do states have regarding SNAP?

States must cover more of SNAP's administrative costs and may pay a portion of benefits if their payment error rates are too high.

What types of food can be restricted under SNAP in some states?

Some states have restricted purchases of items like soda, energy drinks, and candy.

Who does WIC specifically help?

WIC helps pregnant, postpartum, and breastfeeding women, infants, and children under age five.

What types of foods does WIC provide?

WIC provides specific healthy foods such as milk, eggs, fruits, vegetables, and cereal.

What additional services does WIC offer beyond food assistance?

WIC offers nutrition education, breastfeeding support, and referrals to healthcare services.

Why is WIC important for child development?

WIC helps ensure pregnant women and young children get the nutrients they need, preventing poor nutrition and low birth weights.

What is the main difference between SNAP and WIC?

SNAP helps families afford groceries in general, while WIC focuses on providing specific nutritious foods and health support for mothers and young children.

What was the purpose of Mother's Aid Programs before AFDC?

They provided financial assistance specifically to mothers to prevent them from surrendering their children to orphanages due to poverty.

How do AFDC and Social Security differ in target populations?

Social Security is for retired workers and individuals with disabilities, while AFDC targets low-income, single-parent families.

What determined benefits under AFDC?

Benefits were based on demonstrated financial need and destitution, determined by state-set income and asset limits.

How was Social Security funded?

Social Security is funded through dedicated payroll taxes (FICA) split between employers and employees.

What were some criticisms of AFDC?

Critics argued it created dependency, discouraged employment, and had disincentives for marriage.

What cultural values contributed to public resentment of welfare programs?

The Protestant work ethic emphasized self-reliance and individual labor, leading to friction against perceived non-work rewards.

What demographic shifts affected public opinion about welfare?

The increase in caseloads and the changing racial makeup of recipients fueled negative stereotypes and political backlash.

What key features were included in TANF to address AFDC's problems?

TANF included strict work requirements, time limits, and fixed funding to reduce dependency.

What does TANF stand for?

Temporary Assistance for Needy Families

How does TANF differ from AFDC?

TANF replaced AFDC's open-ended funding with fixed block grants and imposed strict lifetime limits.

What is the primary goal of TANF?

To reduce dependency by promoting job preparation, work, and marriage.

What does TANF encourage regarding family structure?

It encourages the formation and maintenance of two-parent families.

What flexibility does TANF provide to states?

TANF allows states to set their own rules and design programs without needing federal waivers.

What are the funding differences between AFDC and TANF?

AFDC was funded through categorical grants with guaranteed federal matching funds, while TANF uses fixed block grants.

What are the time limits imposed by TANF?

TANF establishes strict federal lifetime limits on benefits, unlike AFDC which had no such limits.

Why has spending on cash assistance decreased under TANF?

Due to fixed funding that hasn't increased with inflation and states reallocating TANF funds to other budget items.

What is the role of the federal government in encouraging work through TANF?

The federal government provides fixed block grants and imposes stricter rules and limits to encourage work.

How do TANF plans vary across states?

States have control over benefit levels, time limits, fund allocation, and work requirements.

What are the cash assistance amounts in Louisiana under TANF?

Historically low, with a family of three receiving around $240 a month from 2002 until 2022.

What is the current sanction policy in Louisiana for TANF?

Immediate case closure for the entire family for noncompliance.

What is a categorical grant?

Funding tied to specific federal rules and categories, requiring states to follow strict guidelines.

What is a block grant?

A fixed amount of federal funding to states with broad discretion on how to use it.

What is CCAP?

Child Care Assistance Program, which helps low- and moderate-income families pay for child care.

Who qualifies for CCAP?

Parents who work, go to school, or look for work, with children under age 13 or under 18 with disabilities.

How does CCAP payment work?

The state pays the subsidy directly to an approved child care provider.

Why does the federal government provide child care subsidies?

To make work possible and rewarding, prevent market failure in early care, boost economic productivity, and support long-term child development.

What is the impact of high child care costs on low-wage workers?

High costs can exceed a low-wage worker's paycheck, making work financially unviable.

How does early child care support long-term child development?

It provides critical educational foundations that help break intergenerational cycles of poverty.

What are the goals of TANF?

To assist needy families, reduce dependency, prevent out-of-wedlock pregnancies, and encourage two-parent families.

What is the significance of Maintenance of Effort in TANF?

States must maintain a certain level of spending on assistance to meet federal goals.

What are the consequences of strict work requirements in TANF?

They make it harder for families to remain on the program due to penalties for noncompliance.

What does TANF's structure mean for economic responsiveness?

TANF funding is disconnected from economic need, not automatically increasing during downturns.

How do time limits in TANF affect families?

They restrict the duration families can receive benefits, leading to potential financial instability.

What is the historical context of TANF's implementation?

TANF was created to reform welfare and reduce dependency on government assistance.

What are the criticisms of TANF's effectiveness?

While it meets some goals, it has been criticized for not adequately serving as a safety net or reducing poverty.