National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Section 8 Low-Income Housing Assistance and Low-Rent Public Housing

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Suggested Citation:"Section 8 Low-Income Housing Assistance and Low-Rent Public Housing." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 446

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APPENDIX D 446 showed considerable variation, from $1,648 per month in New Hampshire to $320 per month in Indiana, with a median value of $574 (and a coefficient of variation of 41%). The maximum AFDC benefit showed similar variation from $923 per month in Alaska to $120 in Mississippi, with a median value of $366 (and a coefficient of variation of 40%).4 The maximum combined AFDC and food stamp benefit showed less variation, from $1,208 in Alaska to $415 in Mississippi, with a median value of $658 (and a coefficient of variation of 22%); see Table 8-1. In relation to the poverty thresholds, in January 1994 the median state AFDC need standard was 60 percent of the poverty threshold for a family of three, and the median state AFDC maximum payment was 38 percent of that threshold (see Table 8-3). Earned Income Tax Credit The EITC was enacted in 1975 to provide tax relief to low-income working families and improve incentives to work. It is refundable, thereby serving as a kind of negative income tax. The EITC was recently expanded to increase the basic benefit for families with more than one child and to provide an EITC for childless workers. For tax year 1994 the maximum EITC credit is 26.3 percent of earnings of $7,750 for a family with one qualifying child and 30 percent of earnings of $8,425 for a family with two or more qualifying children. To qualify, a child must be related to and live with the taxpayer(s) more than 6 months of the year and must be under age 19 (or 24 if a full-time student) or be permanently and totally disabled. For families with higher adjusted gross incomes (from $11,000 up to a ceiling of $23,750 (one child) or $25,300 (two or more children) for tax year 1994), the amount of the credit is reduced fractionally for each added dollar of income. The maximum credit for childless workers is 7.65 percent of earnings of $4,000, and it phases out at adjusted gross income of $9,000. There is no geographic variation in the EITC (as is true of all provisions of the federal income tax). EITC benefits cannot be counted as income for determining eligibility or benefits for AFDC, Medicaid, SSI, food stamps, or low-income housing programs. Section 8 Low-Income Housing Assistance and Low-Rent Public Housing The Section 8 program provides rent subsidies to low-income families and single people, defined as those with incomes at or below 80 percent of the area median (adjusted for family size) as determined by the Department of Housing and Urban Development. A large proportion of subsidies is supposed to go to "very low-income" households—those with incomes below 50 percent of the area median. Countable annual income is defined as gross annual income (which excludes a few sources, such as earnings of children, foster care payments, educational 4 All dollar amounts are for a three-person AFDC unit, consisting of a caretaker and two children.

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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of:

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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