NCPA - National Center for Policy Analysis


March 1, 2006

A brief report this week from the Census Bureau highlighting how welfare programs and tax credits affect incomes among the poor has fanned the politically charged debate on poverty in the United States and how best to measure it, with conservatives offering praise and liberals saying it underplays the extent of deprivation.

  • The researchers found that when noncash benefits like food stamps and housing subsidies were considered, as well as tax credits given to low-income workers, the share of Americans living under the poverty line last year was only 8.3 percent.
  • This is well below the 12.7 percent of Americans that the government officially says lived below the poverty line in 2004 using the conventional methodology that only counts a family's cash income.
  • Douglas Besharov, an expert on social policy at the American Enterprise Institute, said that if additional factors were included in income calculations, like the imputed rental savings for people who live together, the value of home equity and unreported public benefits, the share of Americans living below the poverty line would fall far below 6 percent.

Liberal scholars said the report presents a misleading and partial picture, highlighting uncounted resources available to many poor people but ignoring, on the other side, many new expenses and hardships they face in a changing economy.

Source: Erik Eckholm, "Report on Impact of Federal Benefits on Curbing Poverty Reignites a Debate," New York Times, February 18, 2006; based upon: "The Effects of Government Taxes and Transfers on Income and Poverty: 2004," U.S. Census Bureau, February 14, 2006.

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