April 15, 2016
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Tags: Debt Collection
Organizations mentioned/involved: Bay Area Legal Aid (San Francisco)
It’s an axiom that the only things certain in life are death and taxes. Though many working poor pay no income tax, their income is nevertheless subject to payroll taxes of 7.65 percent, for Social Security and Medicare. While many low-income workers can take advantage of the earned income tax credit, most of the benefits go to families with children. A childless adult working full-time in 2015 for the federal minimum wage (a salary of $14,500) will pay $1,506 in federal taxes, and adults earning the minimum wage are not eligible for any tax credits.
The Center on Budget and Policy Priorities, a left-leaning research institution, calculates that while the EITC can help families eke above the poverty line by allowing them to deduct money for each child in their household, a 2016 report notes that “low-wage workers not raising children are the sole group that the federal tax system taxes into or deeper into poverty.”