Opinion | Sociologist Matthew Desmond estimates $140 billion a year in benefits to low-income people go unclaimed
Determined to file his taxes, a man I know labored to find an accountant to help him, as he does every year. This year is the first year he has an apartment to sleep in, but he earnestly filed his taxes while he was homeless too.
He hit dead-end after dead-end. The first clinic no longer had a grant to provide pro bono services, and the second couldn’t work with people who file as independent contractors. Finally, he paid $75 to an accountant.
He’s diligent and also stressed by the idea of making any missteps with the federal government, as many people experiencing homelessness are, but another reason it’s important to navigate the labyrinthian tax system is that the earned-income tax credit, or EITC, is one major way the federal government deploys funds to alleviate poverty.
Many people experiencing homelessness and poverty miss out on funds owed to them through the EITC. It’s not easy to come up with $75 for an accountant while lugging your belongings on your back and finding a place to sleep each night in a shelter or on the ground.
In fact, sociologist Matthew Desmond writes in his new book, “Poverty, by America,” “The bulk of evidence is that low-income Americans are not taking full advantage of government programs for a much more banal reason: We’ve made it hard and confusing. People often don’t know about aid designated for them or are burdened by the application process.”
He estimates that $140 billion a year are unclaimed by people with little to no income — food stamps, unemployment insurance, EITC, government health insurance, Supplemental Security Income, and on and on.
The red tape is rough. Last week a Street Roots vendor told me she just might be close to receiving her Social Security benefits. She wasn’t there yet, but she had some responses that gave her hope, and that was hope she wanted to share.
I’m particularly surprised by how hard it is for people to get their disability benefits. As Desmond writes, “In poor communities, it is common knowledge that you must apply multiple times for disability.” Similar to my friend’s recurring effort to hire accountants, people in poverty often have to hire attorneys to navigate the disability process.
According to Desmond, only one-third of new disability applications are approved, down from roughly half in the mid-1990s.
I have a friend who lives in a rural section of the state and relies on a walker, but even then, with few nerves to her feet, risks falling. She can’t drive because of her health. She caught a ride with me when I happened to be driving through, and she was required to travel more than an hour to get a psychiatric exam — yet another hurdle to prove her disability. After we arrived, the doctor’s office called to cancel the appointment. She would have to reschedule and find another ride. The whole system that should be making life easier for people who struggle with health actually makes life harder.
There’s an unhealthy fear of fraud targeting people experiencing poverty. Extraordinary bouts of energy — and money — are spent on preventing fraud by working to make sure that the benefits are harder to get and, thus, are far less effective at lowering poverty. Just to try to wrench effectiveness out of the system, the poor have to pony up for accountants and lawyers. Is there any wonder so much money is left unclaimed?
A much more productive focus would be “simply collecting unpaid federal income taxes from the top 1 percent,” as Desmond writes. That would “bring in some 175 billion a year,” he writes.
It’s also difficult for the poorest people to access these benefits designed by housed people, often well-off, who don’t have the perspective of what it is to be unbanked, reliant on cash, moving from day to day.
Street Roots got a first-hand glimpse of this during the early pandemic.
A godsend when Congress passed it, stimulus money was clearly not designed to reach unhoused people. People had to file electronically to receive a paper check (in the earliest rounds) that then had to be cashed by people who didn’t have bank accounts. If they didn’t have a government identification card, they were out of luck because DMVs were shut down.
We began to shift operations so unhoused people could use our office and Zoom with tax attorney Sara Lora at Lewis and Clark’s low-income tax clinic to navigate the digital landscape of applying for money that they had a right to receive. People used Street Roots as a mailing address.
We then worked with banks to cash those checks without IDs, and then cash-checking places that asked Street Roots staff to describe the person over the phone. When the stimulus money shifted to pre-paid cards, that removed a barrier.
We estimated nearly $750,000 of stimulus money was issued to people through these efforts.
In other words, it is well worth it for nonprofits and mutual aid groups to work to reduce these barriers. I’m excited to see Afro-Village PDX now deploy “digital navigators,” people who bring out phones and tablets and computers to help people experiencing homelessness navigate the digital mazes of accessing what they are owed, some of that $140 billion that Desmond writes about.
But it’s absurd that it’s all so hard. Not only do these hoops and hurdles create an inefficient system that is far less effective at reducing poverty than it could be, but it also furthers the stress that burdens people fighting to survive.
“It should be just as easy for a new mother to apply for Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which provides diapers and formula, or a laid-off father to apply for unemployment,” writes Desmond, “as it is for me to have birdseed or mouthwash delivered to my home from an app on my phone.”
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