Minimum guaranteed income = solution to poverty

All that’s needed is 5 reforms to the EITC

IN THE WEEKS leading up to his assassination in 1968, Dr. Martin Luther King Jr. launched a new chapter of his work, referred to as the “Poor People’s Campaign.” This campaign illuminated the relationship between racism and economic injustice and advanced a vision of eliminating poverty for Americans of all races. This work sought synergies between the civil rights movement and other organizing efforts in support of unions, workers, and laborers. Ultimately, King arrived in Memphis to support striking African American city sanitation workers protesting unequal wages and poor working conditions. In addition to a planned march on Washington, the campaign proposed a $30 billion anti-poverty bill that included a minimum guaranteed income for Americans.

Dr. King wrote that ”the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

This simple idea of making direct cash payments as a core racial and economic justice strategy is gaining momentum once again. With so many Americans squeezed financially in recent years, even as the aggregate economy was doing quite well, new advocates took up the call for the creation of a universal basic income program in the United States. Former Service Employees International Union president Andy Stern became a public champion and Andrew Yang ran an insurgent presidential campaign centered on the idea. Then, more recently, federal cash payments made as part of the COVID recovery effort helped mitigate short-term economic pain and helped expand public understanding and interest in the value of direct cash payments.

It remains to be seen whether the federal government will take further action as the COVID crisis shows no signs of abating, but we in Massachusetts can’t afford to sit back and wait. So here’s our big idea: establish a minimum guaranteed income for Massachusetts by making five big reforms to the state’s Earned Income Tax Credit (EITC). These reforms would ultimately provide all families earning up to $70,000 a cash credit of at least $1,200 a year (and often much more), and they would cover households with no income at all who are currently excluded from the state EITC. Importantly, this expanded EITC would be well targeted towards residents of color, who have been subjected to a long history of structural racism and economic exclusion.

Here are the five reforms: 1) Increase the state match rate from 30 to 50 percent of the federal EITC; 2) Provide a minimum $1,200 credit to extremely low-income and no-income households; 3) Extend eligibility to include middle-income families earning up to $75,000 (which is still below the statewide median); 4) Expand eligibility to previously excluded groups, including unpaid caregivers, low-income college students, and immigrants who pay taxes with an Individual Taxpayer Identification Number; and 5) Improve access through free tax preparation services and more frequent payments.

Implemented together, these reforms would provide new cash assistance to an additional 906,000 residents and the average state EITC benefit would increase by about $700 annually (from $685 to $1,386).

Fifty-five years after the 1965 Freedom March where Dr. King and Boston’s civil rights leaders took to the streets from Roxbury to the Parkman Bandstand in the Common, too little has changed for communities of color. For far too long, our state economy has failed to deliver for far too many families. While top earners saw their wages surge in recent years, low- and middle-income households, who are disproportionately people of color, saw little change.

Simultaneously, Massachusetts has become one of the most expensive places in the country to live, as increasing housing, childcare, and higher education costs eat into what modest income gains many people have seen. But here’s the thing: even in the depths of the current economic crisis, we are a wealthy state that could eliminate poverty if we committed ourselves to do so.

Here’s one way to think about it: if Massachusetts were a country, our state GDP per capita would rank us fifth-richest in the entire world. An expansion of cash payments would cost real money, but so do many other things that we’ve made priorities.

Dr. King knew that the promise of the “Beloved Community” meant that all people would share in the wealth of the earth. This also means that we must be a society that starts where every person and family is in a place of prosperity. Our values in the “Beloved Community” require us to take anti-racist positions and eliminate systemic factors that perpetuate cycles of homelessness, education inequity, and poverty, especially in communities of color.

Meet the Author

Imari Paris Jeffries

Executive director, King Boston
Meet the Author

Boston sits in the eye of the storm of three pandemics: a viral/public health one, a racial one, and an economic one. There is little doubt that we will find a vaccine for the first. Providing a minimum guaranteed income can play a key role in helping treat the two others.

Imari Paris Jeffries is the executive director of King Boston and Luc Schuster is the senior director of Boston Indicators.