Bilking the Poor, America’s Poverty Taxes

Any discussion of the safety net and poverty alleviation has to include the ways that local and state governments and private enterprise actively prey on the poor.
Multibillonaire Pete Peterson’s Fiscal Summit concluded on Tuesday with a stand for no-compromise austerity and Speaker of the House John Boehner laying out the case for massive spending cuts. Yesterday the Senate voted down budget proposals that would have slashed Medicaid, cut SNAP, voucher-ized Medicare, and shrunk most other domestic human needs programs. At the same time, these proposals protect and even increase the military budget and cut taxes for those at the top. The Center on Budget and Policy Priorities link estimates that nearly two-thirds of those proposed program cuts would hit low-income people disproportionately.


But authors Barbara Ehrenreich and Gary Rivlin argue that any discussion of the safety net and poverty alleviation has to include the ways that local and state governments and private enterprise actively prey on the poor.

Barbara Ehrereich is the author of “Nickel and Dimed: On (Not) Getting By in America link” and is most recently the founder of the just-launched Economic Hardship Reporting Project, which supports innovative journalism on poverty . In her report “Preying On the Poor,” link released today by TomDispatch, she writes: “Before we can ‘do something’ for the poor, there are some things we need to stop doing TO them. … The amounts extracted from the poor by the private and public sector are comparable to the amounts ‘given’ to the poor through the safety net. It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license.”

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She said today: “I am surprised by the size of these numbers, and made all the more impatient with the standard liberal discourse on poverty. We can’t go on talking about poverty without talking about how it is being manufactured and intensified all the time.”

Journalist and author of five books, including “Broke, USA: From Pawnshops to Poverty, Inc. – How the Working Poor Became Big Business link,” and co-editor of the Economic Hardship Reporting Project with Ehrenreich, Gary Rivlin just wrote the piece “America’s Poverty Tax,” link where he reports on the exorbitant fees the poor and the working poor pay because they have lousy credit or because they have no savings. Rivlin said today: “The numbers show it’s very expensive to be poor.” The article states: “Add up all the profits pocketed by all those payday lenders, check cashers, subprime auto lenders, and other Poverty, Inc. enterprises and divide it by the 40 million households the Federal Reserve says survive on $30,000 a year or less. That works out to around $2,500 per household, or a poverty tax of around 10 percent.”


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