I was quoted in a March 20 story written by Perry Swanson for the Colorado Springs Gazette:
The financial picture is getting worse for Colorado’s working poor families, according to a study issued Wednesday. …
[T]he Colorado Center on Law and Policy… runs the Colorado Fiscal Policy Institute, a Denver-based think tank that sponsored the study, which examines the cost to get by in each of the state’s 64 counties.
The study is called “The Self-Sufficiency Standard for Colorado 2008: A Family Needs Budget.” … The institute Wednesday also unveiled an online Colorado Self-Sufficiency Calculator…
Advocates say the calculator should guide policymakers as they ponder changes to tax laws and welfare programs. They recommend more support for programs designed to help people keep working, such as child-care assistance, food stamps and restoring Colorado’s Earned Income Tax Credit. …
Ari Armstrong, a Denver area resident who writes online about political issues, said the calculator — at least for him and his wife — is flawed.
“The calculator suggests that my wife and I need to spend $666 per month for housing,” Armstrong said. “We actually spend more than that, including utilities and HOA fees, but we could spend less if we needed to. For example, for several years we rented out the basement of my wife’s parents for considerably less. I’ve checked into local apartments that rent for less.”
Armstrong took issue with other estimated monthly costs, including $358 for food and $453 for transportation — too high — and $317 in taxes — much lower than reality.
“I’m all for reducing taxes across the board, and especially for the poor,” he said. “If we’re really interested in helping the poor be self-sufficient, no single measure could be more useful. Welfare expansions do not promote self-sufficiency. They promote dependency.”
Swanson did good job of reporting the basic story while including both perspectives.
You can view the calculator and the report yourself.
However, because Swanson did not include my comments about Social Security, my point about taxes is a bit unclear in the article. Following are my complete, unedited comments to Swanson:
There are two issues here. First, is the calculator legitimate? Second, what are appropriate measures for helping the poor?
Clearly, the “Self-Sufficiency Calculator” is misleading in that it does not actually measure the minimum income needed to live in self-sufficiency.
For example, the calculator suggests that my wife and I need to spend $666 per month for housing. We actually spend more than that, including utilities and HOA fees, but we could spend less if we needed to. For example, for several years we rented out the basement of my wife’s parents for considerably less. I’ve checked into local apartments that rent for less.
The calculator suggests that we need to spend $358 per month on food. But we just made out our monthly budget, and, based on past expenses, we allocated $350 per month for food and household items combined. We could spend far less if we needed to. Last year, we spent a month eating a nutritious but economical diet, and we spent only $159 combined for food. Such a diet wouldn’t be much fun over the long haul, but it is adequate.
The calculator also claims that we need to spend $453 per month on transportation. Nonsense. Running an economical car for modest commutes costs less than that. We in fact lived without a car for about two years and took the bus. An RTD monthly pass costs between $60 and $144.
One thing that the calculator underestimates is taxes. The calculator estimates $317 in taxes for us for a “self-sufficiency” income of $2,195, or about 15 percent of the total. But the real tax burden is much higher. All wages are subject to an employer-employee combined tax of about 15 percent off the top, and that doesn’t even include any income taxes. Add to that property taxes (which renters pay indirectly), sales tax, and a multitude of minor taxes, and the total tax burden is substantial.
I’m all for reducing taxes across the board and especially for the poor. For example, exempting lower-income earners from the Social Security tax alone would be the equivalent of a pay increase of nearly 15 percent. If we’re really interested in helping the poor be self-sufficient, no single measure could be more useful.
Welfare expansions do not promote self-sufficiency. They promote dependency. Moreover, forcing some people to transfer money to others violates rights and pushes out more effective, voluntary charity programs.
If the goal is self-sufficiency, we need more economic liberty and lower taxes, not more political programs backed up ultimately by physical force.