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From page 457...
... The first section describes the TRIM3 model, explains the procedures used to establish baseline simulations and simulate alternative policies, and presents the "baseline" data for this project -- a set of simula­ tions of the key transfer and tax programs as of 2015 (the most recent year of simulations available at the start of this work) -- and the associated estimates of child poverty.
From page 458...
... Full documentation of TRIM3 is available on the project's website, http://trim.urban.org. In this section, we provide a brief overview of the model, describe the aspects of the data preparation that are most relevant to this project, describe the process of creating baseline simulations, and present the results of the 2015 baseline simulations, in terms of both individual programs and child poverty.
From page 459...
... benefits, and o Taxes: Payroll taxes, federal income taxes and credits, and state income taxes and credits. • Detailed modeling: Baseline simulations capture programs in as much detail as feasible, given the limits of the survey data.
From page 460...
... However, the survey is missing some information that is important for simulating benefit and tax programs that affect lower-income families. The two most relevant limitations for this analysis are lack of monthly income data and lack of data on noncitizens' immigrant status.
From page 461...
... Page 9 of 18  APPENDIX F FIGURES APPENDIX F 461 152,000,000 151,000,000 150,000,000 149,000,000 148,000,000 147,000,000 146,000,000 145,000,000 144,000,000 1 2 3 4 5 6 7 8 9 10 11 12 TRIM3‐CPS BLS FIGURE F-1 Number of People Employed in Each Month of 2015, TRIM3-CPS Data vs.
From page 462...
... Monthly amounts for those programs are developed as part of the baseline simulations, described below. 2  For people who report both child support and TANF income, and whose annual child support income equals their state's "pass through" amount times their reported months of TANF income, the months of child support receipt is automatically set equal to the months of reported TANF receipt.
From page 463...
... Whether a noncitizen is potentially eligible for various benefits and for some tax credits depends on his/her specific legal status. To enable detailed modeling of the program rules regarding immigrant eligibility, an immigrant status is assigned to each noncitizen (Table F-1)
From page 464...
... The simulations create new items of information for each household, telling if they are eligible for various programs, their level of tax liability, and so on. Each simulation follows the same steps that an individual would use to compute his or her income taxes or that a caseworker would use to determine a family's eligibility for benefits.
From page 465...
... The Census Bureau imputes federal and state income tax liabilities to the households in the CPS-ASEC as part of their development of SPM poverty estimates, and they make those imputations available to researchers; however, to ensure complete consistency with other simulated data, the TRIM3 analyses use the baseline tax liability amounts modeled within the TRIM3 system. The baseline simulations are performed sequentially, so that information from one baseline can be used as input to subsequent simulations, creating an internally consistent picture of families' benefits, tax liabilities, and tax credits.
From page 466...
... . In the case of housing and child care subsidies, TRIM3 computes the value of the benefit as an assumed full value of what is being provided minus the family's required payment.
From page 467...
... (For example, if an ineligible unit that has been included in the caseload is modeled to receive higher earnings due to a minimum wage increase, it is unclear whether it would be more appropriate to continue to include the unit in the caseload, or whether to assume the unit would lose benefits due to exceeding the eligibility limit by an even greater amount.)
From page 468...
... For children, after identifying children whose parents report them as SSI recipi ents, the rest of the caseload is randomly selected from among children in income-eligible families, to reach targets by family structure (two-parent, single-parent, no-parent) and by state.
From page 469...
... The simulation also takes into account the survey-­eported amount of child care expenses; to the extent r feasible, eligible families whose simulated copayment is similar to what they reported spending in child care expense have a higher likelihood of being included in the simulated caseload, and eligible families whose simulated copayment is quite dif ferent from what they reported spending (e.g., we simulate that their copayment would be $50/month, but they reported spending $3,600 across the year) have a lower likelihood of being included in the simulated caseload.
From page 470...
... , and vary by county and metropolitan area. o Eligibility and benefits challenges: Because eligibility policies may vary from one Public Housing Authority to another, baseline simulations do not explicitly model eligibility beyond requiring that household income be below 80 percent of area median income.
From page 471...
... . o Timeframe: Annual o Policies: State-specific eligibility policies are obtained from the LIHEAP Clearinghouse website (https://liheapch.acf.hhs.gov)
From page 472...
... o Alignment of usage of selected credits: In general, taxpayers are assumed to take all credits for which they appear eligi ble. However, the modeling of the child and dependent care expense credit assumes that a portion of the units who appear eligible -- based on having working parents, children under age 13, and child care expenses -- do not in fact take the credit for some reason (for example, because they are ineligible due to their flexible-spending-account benefits)
From page 473...
... (CCDF-funded child care subsidies are not reported in the survey.) In the case of SNAP, the simulated caseload is very close to the actual figure, but simulated aggregate benefits fall short of the amount, according to administrative data, by 8.5 percent.
From page 474...
... Monthly Recipients, Infants/ na 5,861 5,891 99.5% Children Avg. Monthly Recipients, Womenj na 907 1,865 48.6% Annual Value of Benefit, Pre-rebatek na $4,875 na -- CCDF-funded Child Care Subsidies Avg.
From page 475...
... Amounts are in Millions Dataa Simulated Datab Data Payroll tax Workers Subject to OASDI Tax na 157,185 168,899 93.1% Taxable Earnings for OASDI na $6,748,090 $6,395,360 105.5% Taxes Paid by Workers (OASDI + HI) na $560,877 $541,055 103.7% Federal Income Taxes Number of Positive Tax Returns na 104,461 99,022 105.5% Total Tax Liability, Positive Tax Returns na $1,312,511 1,435,849 91.4% Earned Income Tax Credit Returns with Credit na 19,712 28,082 70.2% Total Credit na $41,770 $68,525 61.0% State Income Taxes Number of Positive Tax Returns na 89,970 na -- Taxes Paid, Net of Creditsl na $318,089 $340,468 93.4% NOTE: na = not available; avg.
From page 476...
... The Census Bureau tax model does not impute Loss capital gains and so they are not included in the Census Bureau SPM. However, capital gains are included in the TRIM3 SPM because they are included in the calculation of TRIM3 federal and state income taxes.a Federal Income TRIM3 simulated amounts are used instead of Census Bureau simulated Tax amounts.
From page 477...
... Such reductions to earnings are not captured in the baseline simulation. The federal income tax simulation counts a number of tax returns with positive income tax liability that is 5.5 percent higher than the actual number of returns for tax year 2015, but the model falls short of the actual amount of tax liability on positive-tax returns by 8.6 percent.
From page 478...
... When we use the TRIM3 model to calculate SPM poverty using only the CPS-ASEC and the Census Bureau imputed values, we find that 12.038 million children were in SPM poverty in 2015, compared with 12.026 million according to the Census Bureau (Table F-4) .6 Small differences such as this arise because our calculated results are generated using public-use data rather than internal Census Bureau files and because certain household heads younger than 18 who are living with parents are classified as "children" when calculating the SPM threshold in our calculated results, but not in the published results.7 5  See Fox (2017)
From page 479...
... We next show the incremental effects of substituting TRIM3 variables for the CPS-ASEC and Census Bureau variables in the poverty calculation, focusing first on TRIM3 correction for underreporting of SSI, TANF, SNAP, WIC, and LIHEAP, and then describing the effects of incorporating other TRIM3 variables. We find that substituting TRIM3-simulated SSI income into the Census Bureau SPM poverty definition lowers the estimated SPM child poverty rate from 16.3 percent to 15.5 percent.
From page 480...
... Incorporating TRIM3 child care expenses into the SPM increases the estimated child poverty rate by 0.2 percentage points.8 Substituting TRIM3 taxes and tax credits for the Census Bureau amounts and incorporating TRIM3-imputed realized capital gains and losses increases the child poverty rate 0.3 percentage points.9 Taken together, the TRIM3 corrections for underreporting and other TRIM3 adjustments reduce the child poverty rate from 16.3 percent to 13.0 percent. The TRIM3 adjustments also affect the deep poverty rate -- the share of children below one-half of the poverty threshold.
From page 481...
... . If Census Bureau data imputations are assigning too much income of certain types to low-income families with children, that would operate in the direction of understating child poverty.
From page 482...
... , child care expenses, the minimum wage, an employment program, SNAP, housing subsidies, SSI, child allowances, child support assurance, immigrant eligibility for safety-net benefits, and a basic income guarantee. For each policy area, two or more variations of the policies were simulated.
From page 483...
... for a prior project examining the potential for policies to reduce child poverty. OVERVIEW OF SIMULATION ASSUMPTIONS Assumptions needed to be made about the extent to which the policy changes would change families' behavior in three areas: program participation, expenditures that impact the SPM, and employment or hours of work.
From page 484...
... Family Expenditure Decisions Two key types of expenses affect the program simulations and the SPM poverty calculations and housing and child care expenses. The modeling assumes that changes in a family's income -- for example, higher earnings due to a minimum wage increase -- do not result in the family moving to a different apartment or child care provider.
From page 485...
... Note that the employment and earnings effects were not explicitly restricted to poor families with children. Depending on the specific policy and how the employment and earnings changes were defined and implemented, those changes might have affected nonpoor families, or in some cases might have affected families without children.
From page 486...
... Changes in employment status also affect a person's estimated level of work expenses other than child care. Following the Census Bureau's SPM methods, a family's resources are offset by $40.07 for each week that an adult has earnings to reflect spending on transportation and other work expenses (other than child care)
From page 487...
... Looking back at past TRIM3 analyses of the anti-poverty impacts of potential policies, it is almost never the case that a simulated policy is enacted exactly as it was modeled, and without any other policy changes or economic changes occurring at the same time.12 Nevertheless, within the assumptions and population data used for this analysis -- in the terminology of economics, "all else equal" -- ­ microsimulation modeling provides a way to assess the anti-poverty impacts of the different policies, using the same data, computation mechanisms, and assessment metrics for each one. EITC The Committee requested exploratory analysis of several changes to the EITC in the federal income tax system.
From page 488...
... be consistent with the job characteristics of current EITC recipients in each of five educational-attainment groups: less than high school, high school, some college, 2-year college degree, and 4-year college degree or more. To implement the employment effects, we began by counting the numbers of unmarried and married women who are mothers of a child under age 18 who are not students and who do not have a disability; those counts came to 10.144 million unmarried mothers and 25.107 million married mothers.
From page 489...
... APPENDIX F 489 TABLE EITC-1  EITC Parameters for the Two EITC Policy Options Maximum Earnings Earnings Earnings Credit to Which When When Rate Rate Maximum Phase-out Phase-out Eligibility (Phase-in) Applied Credit Begins Rate Ends Actual 2015 EITC Policies Single, No 7.65% $6,580 $503 $8,240 7.65% $14,820 Children Single, One Child 34.00% $9,880 $3,359 $18,110 15.98% $39,131 Single, Two 40.00% $13,870 $5,548 $18,110 21.06% $44,454 Children Joint, No Children 7.65% $6,580 $503 $13,760 7.65% $20,340 Joint, One Child 34.00% $9,880 $3,359 $23,630 15.98% $44,651 Joint, Two 40.00% $13,870 $5,548 $23,630 21.06% $49,974 Children Single, >= Three 45.00% $13,870 $6,242 $18,110 21.06% $47,747 Children Joint, >= Three 45.00% $13,870 $6,242 $23,630 21.06% $53,267 Children EITC Policy #1 -- Expanded Phase-in Range Single, No 7.65% $6,580 $503 $8,240 7.65% $14,820 Children Single, One Child 68.00% $6,484 $4,409 $11,541 15.98% $39,131 Single, Two 74.00% $8,875 $6,567 $13,269 21.06% $44,454 Children Joint, No Children 7.65% $6,580 $503 $13,760 7.65% $20,340 Joint, One Child 68.00% $6,484 $4,409 $17,061 15.98% $44,652 Joint, Two 74.00% $8,875 $6,567 $18,789 21.06% $49,973 Children Single, >= Three 79.00% $10,300 $8,137 $15,199 25.00% $47,747 Children Joint, >= Three 79.00% $10,300 $8,137 $20,640 24.94% $53,267 Children continued
From page 490...
... 3.0 Pos. 7.4 Target Number of New Jobs 304,000 771,000 Married Mothers (25.107 million a)
From page 491...
... . To gain this information, we conducted preliminary simulations in which we simulated all employed unmarried mothers to start working, and all employed married mothers to stop working, and observed which tax units were able to take the EITC under each of the new EITC policies.
From page 492...
... 492 A ROADMAP TO REDUCING CHILD POVERTY TABLE EITC-3  Among Unmarried Mothers Taking the EITC in 2015, Average, by Educational Attainment: Percentage Working Part Time vs. Full Time, and Mean Weeks, Hours, and Wages for Each Group Mean Percent by Mean of Weeks Hours/ Mean Hourly Job Type Worked Week Wage Less Than High School Full Time and Full Year 37% 51.9 41 $10.36 Part Time or Part Year 63% 34.6 30 $9.67 Exactly High School Full Time and Full Year 53% 52.0 41 $11.78 Part Time or Part Year 47% 38.1 31 $10.64 Some College Full Time and Full Year 58% 52.0 41 $12.51 Part Time or Part Year 42% 37.2 31 $12.48 2-Year Degree Full Time and Full Year 62% 52.0 41 $13.30 Part Time or Part Year 38% 37.0 32 $13.14 Bachelor's or More Full Time and Full Year 62% 52.0 41 $14.46 Part Time or Part Year 38% 39.6 30 $14.22 TABLE EITC-4  Data for Modeling New Jobs for EITC #1 Number of Percent Who Now Unmarried Take the EITC, Percent of the Mothers Who, Among Unmarried potential New Target If They Start Working Mothers Workers to be Number of Working, Qualify Not Excluded by Simulated to New Jobs, Education Group for the EITC Immigration Status Take a Job EITC #1 Less Than High 259,549 89.5% 36.0% 93,458 School Exactly High School 377,317 80.9% 32.6% 122,849 Some College 186,841 76.3% 30.7% 57,359 2-Year Degree 76,367 64.7% 26.0% 19,876 4-Year Degree+ 67,762 39.6% 15.9% 10,791 TOTAL 967,836 304,333
From page 493...
... Hours Reductions for Married Mothers Finally, the simulation of EITC Policy #2 included reductions in hoursworked for all married mothers whose tax units would receive the EITC under the new policy (prior to any changes in weekly hours of work13) , 13  This excludes what is likely a very small number of women who, if they did slightly reduce their usual weekly hours, would become newly eligible for the EITC; however, identifying that group would have required additional preparatory work.
From page 494...
... Without Employment and Earnings Effects In the absence of employment and earnings changes (see the columns labeled "No EE" in Table EITC-5) , EITC Policy #1 increases the annual amount of federal EITC (and decreases annual federal income tax liability)
From page 495...
... $1,254,515 -$8,202 -$10,008 -$16,712 -$23,081 State Income Taxes   Amount of Tax Liability ($ Millions) $318,089 -$450 -$483 -$897 -$1,181 Employment and Earnings Changes         People Who Start Working (Thousands)
From page 496...
... The aggregate reduction in benefits is $1.2 billion due to EITC Policy #1 and $2.5 billion due to EITC Policy #2. For example, when employment and earnings effects are modeled for EITC #2, SNAP benefits fall by $1.5 billion, TANF benefits fall by $0.9 billion, the value of housing subsidies falls by $0.6 billion, SSI and unemployment compensation benefits each decline by $0.1 billion, and LIHEAP and WIC each decline by smaller amounts, while the value of child care subsidies increases by $0.7 billion.
From page 497...
... Because the credit is nonrefundable, lower-income families with no positive federal income tax liability do not receive any benefit from the credit. The Committee proposed a substantial expansion of the CDCTC, as follows: • The CDCTC would become fully refundable.
From page 498...
... The child care expenses used to model the credit are primarily the expenses reported in the CPS-ASEC survey;14 for families simulated to received subsidized child care, the reported expenses are replaced by the family's simulated copayment. The 2015 baseline simulation identified 6.3 million tax returns taking the credit and receiving $3.6 billion in credit, almost exactly matching the actual figures for tax year 2015.
From page 499...
... To the extent that the survey underidentifies the incidence or amount of child care expenses for lower-income families, the relative impact of the policy changes could be misestimated. CCDF Policy: Implementation Assumptions The federal government's CCDF block grant provides money to states that they use to provide child care subsidies to lower-income families with children who are age 12 or under or who have a special need.
From page 500...
... We assumed that families with income under 150 percent of the poverty guideline who did not receive a subsidy in the baseline simulation would start to receive a subsidy only if they reported child care expenses in the CPS-ASEC survey. This conservative assumption regarding take-up ensured that no families would become worse-off financially as measured by the SPM measure.
From page 501...
... . For both unmarried mothers of children age 12 and under and married mothers of children age 12 and under, three aggregate amounts were computed: aggregate net child care expenses in the baseline, aggregate net child care expenses with the CDCTC policy in place, and aggregate net child care expenses with the CCDF policy in place.
From page 502...
... For married women, however, the CDCTC policy increased aggregate expenses, due to the fact that tax units with AGI above $75,000 lost the CDCTC, and most of those units were married couples. Applying the elasticity to the percentage changes in aggregate expenses and to the baseline numbers of employed mothers resulted in targets of 607,000 newly working unmarried mothers and a decline in employment of 128,000 for married mothers.
From page 503...
... For the CDCTC policy, the job reductions for married women were assigned randomly among the subset of married mothers who were worseoff under the new policy than the baseline policy, when the new CDCTC policy was modeled without employment changes. Child Care Expense Policy: Simulation Results In the absence of employment effects, the two policies focused on child care expenses resulted in relatively modest reductions in child poverty.
From page 504...
... $6,611 $6,228 $7,936 Federal income taxes           Amount of Tax Liability ($ Millions) $1,254,515 -$1,606 -$7,462 $6 -$1,166 State income taxes           Amount of Tax Liability ($ Millions)
From page 505...
... For example, in the CY 2015 CPS-ASEC data, among families with employed parents/guardians, children age 12 and under, and AGI of $25,000 or less, only about 30 percent reported any positive child care expenses. The employment effects increase the anti-poverty impacts of the CDCTC expansion.
From page 506...
... The federal minimum wage for tipped workers is $2.13. The Committee requested two simulations of minimum wage increases: • Minimum Wage Policy #1: An increase in the federal minimum wage to $10.25 in 2020 dollars, in all states.
From page 507...
... TABLE MW-1  State-level Minimum Wage Data, 2015 Regular Tipped 10th Regular Tipped 10th Minimum Minimum Percentile Minimum Minimum Percentile State Wage ($)
From page 508...
... However, complications arise in determining current hourly wages, identifying which workers might be affected by the increase, modeling some additional wage increases that might occur even if not legislatively required (sometimes called "spillover" increases) , modeling changes for workers receiving the tipped minimum wage, and modeling changes for other tipped workers.
From page 509...
... The hourly wage computed from the annual data is also used in all cases when an ES wage is not available. Identifying Workers Covered By the Regular Minimum Wage In general, we identify workers covered by the standard minimum wage (not the tipped minimum)
From page 510...
... Modeling Spillover Increases Estimates of the impact of minimum wage increases generally assume that employers would increase the wages of some employees beyond what is legislatively required. This could occur when an employer wants to maintain a certain relative ordering of hourly wages across a group of employees.
From page 511...
... The relationship between the new required wages and the wages including the spillover assumptions is shown in Figure MW-1 for a state using the federal minimum wage. Modeling Changes for Workers Who Receive the Tipped Minimum Wage Workers in some occupations that receive a large portion of their compensation in tips often receive what is known as the "tipped mini mum wage," currently set at $2.13 at the federal level and higher in some states.
From page 512...
... : If a worker's estimated total hourly pay is within the range from 13 cents below the state's tipped minimum wage to 26 cents below the state's regular minimum, we assume the employer was not complying with the minimum wage law, and would continue to not comply. Therefore, for these workers, wages are increased by only the amount of the tipped minimum wage increase.
From page 513...
... Modeling Changes for Other Workers Who Receive Tips In addition to workers who receive the tipped minimum wage, many other workers receive tips in addition to receiving a base pay amount that is at least as high as the regular minimum wage. We consider the following occupations as receiving tips, but not the tipped minimum wage: barbers, hairdressers, other personal appearance workers, massage therapists, hosts and hostesses, taxi and chauffer drivers, and all other person care and service workers.19 For this group of workers, estimating the impact of the minimum wage increase requires not only an estimate of the total hourly pay including the tips, but also the amount of base pay vs.
From page 514...
... Minimum Wage Policy: Employment Effects The Committee assumed that increases in the minimum wage would cause some reduction in employment; they requested that the simulations follow the job-reduction approach used by CBO (2014) as closely as possible.
From page 515...
... The Committee chose this approach rather than an approach giving different likelihoods of job loss depending on a person's starting wage, since the available evidence does not specifically address the relative likelihoods of job loss depending on a worker's starting wage. For each age group, the job loss was distributed proportionally across three broad groups of workers -- nontipped workers, workers receiving the tipped minimum wage, and other tipped workers -- in the same proportions TABLE MW-2  Key Data for Estimates of Employment Reduction Among Workers Directly Affected by a Minimum Wage Increase Minimum Wage Policy #1 Minimum Wage Policy #2 Teen Adult Teen Adult Workers Workers Workers Workers Elasticity, Adjusted to Apply to -0.3375 0.1125 -0.3375 0.1125 Average Increase in Wage for Directly Affected Workers Average Increase in Wage 13.8% 11.9% 10.5% 9.2% Average Increase *
From page 516...
... , the receipt of unemployment compensation in this simulation is probably overstated. Minimum Wage Policy: Simulation Results The minimum wage policy changes reduced child SPM poverty slightly -- from 13.0 percent to 12.8 percent (Minimum Wage Policy #1)
From page 517...
...   $13,867 $12,624 $7,997 $7,227 Spending and Tax Summary ($ Millions)           Aggregate Benefits Paidb $197,816 -$933 -$78 -$571 $10 Aggregate Taxes: Payroll, Federal, State $2,588,958 $3,950 $3,609 $2,226 $2,031 Total Change, Annual Government Spending   -$4,883 -$3,688 -$2,797 -$2,021 NOTE: EE = Employment Effects.
From page 518...
... As mentioned earlier, most of the people affected by the minimum wage increase were either not in families with children or not in families in SPM poverty; job loss has the potential to affect the child poverty results only for job-losers who are in poor families with children that would be raised out of SPM poverty by the minimum wage increase. EMPLOYMENT POLICY The Committee requested two simulations to approximate the implementation of a work training program -- the WorkAdvance program -- that has been implemented as a demonstration project and which appears to increase participants' earnings (Hendra et al., 2016)
From page 519...
... With that assumption, when the earnings impacts for the three employment subgroups are weighted by that subgroup's estimated portion of the total (22, 39, and 39 percent) , the resulting overall earnings impact equals the overall reported impact.
From page 520...
... Employment Policy: Earnings Effects According to the available evaluation results, the average impacts of WorkAdvance on participants' annual earnings have been as follows: (1) for participants with less than 1 month of nonwork, a $327 reduction in earnings; (2)
From page 521...
... For the 30-percent participation simulation, the average annual earnings change across the entire affected group was an increase of $1,842; the average was somewhat lower than the desired target because the simulated participants included too many men in the group experiencing a slight reduction in earnings rather than an increase. Employment Policy: Simulation Results The WorkAdvance simulations had modest impacts on child poverty.
From page 522...
...       Aggregate Benefits Paidb $197,816 -$137 -$504 Aggregate Taxes: Payroll, Federal, State $2,588,958 $135 $297 Total Change, Annual Government Spending   -$271 -$801 NOTE: EE = Employment Effects. a Changes are shown in percentage points.
From page 523...
... SNAP Policy Implementation Assumptions The SNAP policies involved three separate types of change -- increases in the regular SNAP benefits, the adjustment for children ages 12 and over, and the SEBTC benefit. 23  See https://fns-prod.azureedge.net/sites/default/files/ops/sebtcfinalreport.pdf.
From page 524...
... Children receiving SNAP benefits in all 3 months received a total of $180 in benefits for the summer. 24  We made a corresponding adjustment to the minimum SNAP allotment guaranteed to 1 and 2 person households so that the value continued to equal 8 percent of the maximum SNAP allotment for a 1-person SNAP assistance unit.
From page 525...
... Following the committee's specifications, we assigned SEBTC to children receiving SNAP as follows:
From page 526...
... SNAP Policy: Employment and Earnings Effects The Committee assumed there would be reductions in both employment and hours of work due to the expanded nutrition benefits. Changes were estimated only for employed mothers; no changes were estimated for women who are not mothers or for any men.
From page 527...
... The Committee extrapolated from those findings to estimate the impacts of increasing benefits in the already-existing program. For example, the upper-bound employment and earnings impacts of a 20-percent SNAP benefit increase on unmarried mothers are derived by starting a Hoynes and Schanzenbach estimate of the impacts of the initial roll-out of SNAP and multiplying by 0.2.
From page 528...
... . Therefore, the impacts TABLE SNAP-3  Changes in Maternal Employment and Earnings Due to SNAP Policies #1 and #2 SNAP Policy #1 SNAP Policy #2 No With No With SEBTC SEBTC SEBTC SEBTC Unmarried Mothers Reduced Employment Percentage Point Change in Neg.
From page 529...
... Implementing Job Reductions To implement the reduction in jobs, we first identified all married and unmarried mothers receiving SNAP in the baseline simulation. We applied the percentage point changes in the employment rate selected by the Committee to these counts.
From page 530...
... Implementing Reductions in Hours of Work To implement the changes in hours of employment, the Committee requested that the reductions be spread as widely as possible over the women at-risk of employment or earnings changes who were not modeled in the prior step to stop working. We identified the smallest change in weekly hours that would achieve the desired average when applied to all or most of the at-risk group, and imposed the following changes: • Employed mothers receiving SNAP in the baseline, with earnings only in SNAP months o Unmarried mothers: -- No SEBTC (average reduction=64.3 hours)
From page 531...
... Simulation of employment effects -- including some people leaving their jobs and others reducing their hours -- somewhat reduces the estimated anti-poverty effect of the policy scenarios. For example, SNAP Policy #2, which reduces child poverty by 2.6 percentage points without employment and earnings effects, reduces it by 2.3 percentage points when employment and earnings effects are included.
From page 532...
...     0.142   0.160   0.168 Net Annual Earnings Change ($     -$3,376   -$3,740   -$3,963 Millions)
From page 533...
... a Changes are shown in percentage points. b The benefit programs included in these figures are unemployment compensation benefits, SSI, TANF, child care subsidies, housing subsidies, SNAP, LIHEAP, and WIC.
From page 534...
... Housing Policy: Implementation Assumptions The simulations assign additional vouchers to households meeting all of the following criteria: (1) the household meets the income eligibility limit (i.e., has income below 80 percent of area median income)
From page 535...
... The Committee requested that the average reduction be applied across the entire at-risk group. In each household gaining a subsidy, if the head of that household was employed, his or her hours of work were reduced by 7.3 percent; there were no reductions for people classified as the spouse of the household head, or for any other individuals in the affected households.
From page 536...
... Simulating employment effects slightly reduces the estimated anti-poverty effect of the policy scenarios, due to reduced employment among some of the families assigned vouchers. With employment effects, the child poverty rate is 10.9 percent in the first scenario and 10.0 percent in the second scenario.
From page 537...
...           Aggregate Benefits Paidb $197,816 $21,881 $23,422 $31,053 $33,502 Aggregate Taxes: Payroll, Federal, State $2,588,958 $0 -$712 $0 -$1,414 Total Change, Annual Government Spending   $21,881 $24,134 $31,053 $34,916 NOTE: EE = Employment Effects. a Changes are shown in percentage points.
From page 538...
... • SSI Policy #2: Increase by two-thirds the SSI benefit guarantee for children who are SSI recipients. SSI Policy Implementation Assumptions Both of these policies were implemented as percentage increases in the SSI "income guarantee" -- the dollar amount that determines a person's financial eligibility for a benefit and that determines the amount of the benefit.
From page 539...
... To estimate the extent to which the caseload would increase due to increased enrollment by currently eligible children, we began by estimating the current participation rate for this group. We used the 2015 ACS data combined with the SSI caseload data to estimate that 67 percent of children ages 5 and over who are eligible for SSI receive the benefit.28 However, if the income guarantee is increased by either one-third or two-thirds, the participation rate would be expected to increase.
From page 540...
... Combining the increases in the children's caseload from previously eligible children starting to participate and newly eligible children beginning to participate, the total increase in the children's SSI caseload was estimated at 189,000 for SSI Policy #1 and 364,000 for SSI Policy #2. The simulations came close to these targets, increasing the numbers of children receiving SSI at some point during the year by 180,000 in simulation for SSI Policy #1 and by 348,000 for SSI Policy #2.29 SSI Policy: Employment and Earnings Effects The Committee assumed that increasing children's SSI benefit levels could reduce the earnings of their parents or guardians.
From page 541...
... CHILD ALLOWANCES The Committee requested exploration of numerous versions of a child allowance policy, varying in terms of maximum amount, phase-out for higher-income families, and other policy parameters. After considering preliminary results from numerous options, the Committee chose two variants for detailed analysis: • Child Allowance Policy #1: Maximum allowance of $2,000 per year for each dependent child age 16 or younger, phased out according to the same schedule used to phase out the Child Tax Credit (CTC)
From page 542...
...     -$603   -$1,474 Spending and Tax Summary ($ Millions)           Aggregate Benefits Paidb -$2,661 $3,967 $4,092 $8,742 $9,030 Aggregate Taxes: Payroll, Federal, State $0 -$1 -$143 $1 -$356 Total Change, Annual Government Spending   $3,968 $4,235 $8,741 $9,386 NOTE: EE = Employment Effects.
From page 543...
... Child Allowance Policy: Implementation Assumptions The initial exploration of child allowance policies included simulations that varied in numerous ways -- in terms of the maximum per-child amount, the phase-out of the maximum amount (if any) for higher-income families, the maximum age at which a child is eligible for the allowance, whether children who are not dependents are eligible for the allowance, restrictions on eligibility based on citizenship or immigration status, whether the allowance can exceed a family's tax liability and by how much, how the allowance interacts with other aspects of the federal income tax system (e.g., personal exemptions)
From page 544...
... A small number of states have credits that use the federal CTC as a starting point for a state credit, so becoming eligible for more or less in CTC could also affect a family's state income taxes. We assumed that for purposes of numbers of individuals, states would continue to use the baseline concepts; for example, if a state's tax code allowed an exemption for each child, we assumed she or he would continue to do so even if child exemptions were disallowed as part of a child allowance policy.
From page 545...
... , the Committee identified a set of elasticities to use in determining employment and earnings changes in response to a child allowance policy (Table CA-1)
From page 546...
... .32 The selection of the specific parents to reduce their hours was random among all those benefitting from the child allowance, and not conditioned on their family's relative income increase due to the allowance. Child Allowance Policy: Simulation Results The hypothetical child allowances, when modeled with employment and earnings effects, reduced child poverty from the baseline of 13.0 percent to as low as 7.7 percent (with Child Allowance Policy #2)
From page 547...
... The aggregate amount of allowance is about $110 billion higher than the baseline amount of CTC/ACTC, and the aggregate reduction in federal income tax liability is $74.8 billion -- the highest cost of any of the Child Allowance options. The child poverty rate drops by 4.7 percentage points, which is a larger drop than produced by Child Allowance #1 (3.4 percentage points)
From page 548...
... $45,104 $67,462 $67,463 $87,482 $87,464 $110,342 $110,427 Amount of Tax Liability ($ Millions) $1,254,515 -$31,891 -$32,188 -$51,911 -$52,560 -$74,771 -$75,871 State Income Taxes       Amount of Tax Liability ($ Millions)
From page 549...
... a Changes are shown in percentage points. b The benefit programs included in these figures are unemployment compensation benefits, SSI, TANF, child care subsidies, housing subsidies, SNAP, LIHEAP, and WIC.
From page 550...
... In the case of Child Allowance #2 -- the variant producing the greatest child poverty reduction -- the SPM child poverty rate falls by 5.4 percentage points when this policy is modeled without employment and earnings effects, but by 5.3 percentage points when these effects are included (Table CA-2)
From page 551...
... The child support assurance policy was then simulated using this information. For each month and for each child imputed to be due child support under a formal order, we set the child support assurance benefit 34  Although TRIM3 adjusts for underreporting of child support by TANF recipients in some years, this was not included in the 2015 TRIM3 baselines.
From page 552...
... We assumed that two programs -- SNAP and TANF -- would institute new policies that would be applied to both child support income and child support assurance income, as follows:36 • TANF: The TANF program's treatment of child support income is complex. TANF recipients must assign their child support payments to the state to offset the cost of TANF benefits, although some states transfer (or "pass through")
From page 553...
... • WIC: The WIC program fully counts child support as income, and we assumed the program would also fully count child support assurance income received by the family. • Federal and state income taxes: Child support income is not taxed, and we assumed that child support assurance income received by the family would likewise not be taxed.
From page 554...
... We determined the portion of each group to reduce their hours by 1 hour per week in order TABLE CSA-1  Percentages of Parents Simulated to Reduce Hours Due to Child Support Assurance, and Aggregate Reduction in Hours Child Support Child Support Assurance Assurance Policy #1 Policy #2 Percentage of Earners With Child Support Assurance Who Reduce Hours By 1 Hour Per Week Men 10% 15% Married Women  7% 11% Unmarried Women 15% 22% Aggregate Reduction in Hours of Employment 16.0 million 25.0 million
From page 555...
... In the absence of employment effects, the $100 child support assurance policy would decrease the estimated child poverty rate by about 0.3 percentage points. The $150 child support assurance policy would decrease the child poverty rate by 0.4 percentage points, from 13.0 to 12.6 percent.
From page 556...
...           Aggregate Benefits Paidb $197,816 $5,558 $5,596 $8,679 $8,737 Aggregate Taxes: Payroll, Federal, State $2,588,958 -$1 -$65 -$1 -$106 Total Change, Annual Government Spending   $5,558 $5,660 $8,680 $8,843 NOTE: EE = Employment Effects. a Changes are shown in percentage points.
From page 557...
... (The employment and earnings changes have no impact on the cost of the child support assurance benefits.) IMMIGRANT ELIGIBILITY POLICIES The Committee requested two simulations related to the eligibility of noncitizens for transfer benefits: • Immigrant Eligibility Policy #1: All legal immigrants are potentially eligible for all programs; unauthorized immigrants and noncitizens who are in the country temporarily (e.g., people with student visas or work visas)
From page 558...
... Unauthorized immigrants and temporary residents are never eligible for SSI. o Change modeled for Immigrant Eligibility Policy #1: All restrictions on the potential eligibility of legal immigrants were removed.
From page 559...
... o Change modeled for Immigrant Eligibility Policy #2: All restric tions on the potential eligibility of legal immigrants, unautho rized immigrants, and temporary residents were removed. • CCDF-funded child care subsidies o Baseline: Immigrant-related restrictions apply at the level of the child, not the parents.
From page 560...
... o Change modeled for Immigrant Eligibility Policy #1: No change was needed. o Change modeled for Immigrant Eligibility Policy #2: The restrictions on federal EITC eligibility for unauthorized immigrants and temporary residents were removed.
From page 561...
... As discussed earlier in this report, disability status cannot be observed for children in the CPS-ASEC data, so we do not have an estimate of the SSI participation rate for program-eligible children. To model an appropriate increase in the children's SSI caseload for each of the two immigrant policies, we computed the percentage increases in the numbers of children meeting both financial eligibility rules and the immigrant restrictions -- first in the baseline situation, then under Immigrant Eligibility Policy #1, and finally under Immigrant Eligibility Policy #2.
From page 562...
... Immigrant Eligibility Policy: Employment and Earnings Effects The Committee chose to model the employment and earnings changes expected to be caused by changes in benefits from one program: SNAP. Among programs affecting large numbers of children, SNAP was the program showing the largest aggregate benefit changes.
From page 563...
... For example, under the Immigrant Eligibility Policy #1 option, for households including noncitizens, including unmarried mothers, and receiving SNAP in both the baseline and the alternative policy, benefits were on average 1.6 percent lower when the Immigrant Eligibility Policy #1 was modeled without employment effects than in the baseline. We applied the average 39  The relatively large change in weekly hours was necessary to achieve an average annual reduction of 322; each woman's reduction in hours ranged from 8 to 416 depending on her weeks of work during the year.
From page 564...
... Married Mothers Number 166,000 905,000 10,000 10,000 452,000 452,000 Percentage Point Change in Neg.
From page 565...
... Tax liabilities were unaffected by Immigrant Eligibility Policy #1, but reduced by Immigrant Eligibility Policy #2, because one element of that policy allowed unauthorized immigrants and temporary residents to take the EITC. Total tax liability falls by $6.6 billion in Immigrant Eligibility Policy #2; $6.3 billion of the reduction is from increased federal EITC payments, and the remaining $0.3 billion in reduced tax liability is due to the secondary impacts of the federal income tax changes on state income tax liabilities.
From page 566...
...     0.014   0.090 Net Annual Earnings Change ($ Millions)
From page 567...
... a Changes are shown in percentage points. b The benefit programs included in these figures are unemployment compensation benefits, SSI, TANF, child care subsidies, housing subsidies, SNAP, LIHEAP, and WIC.
From page 568...
... However, in BIG #2, BIG also counts as income for the purposes of cash and in-kind benefit programs, and the value is reduced or eliminated for Social Security recipients. Basic Income Guarantee Policy: Implementation Assumptions The simulation of the policy required computing the initial benefit and then modeling the related changes in income tax computations and in other benefit programs.
From page 569...
... Although no other explicit changes were made to the federal income tax system, some secondary impacts occurred. For exam ple, because tax units with AGI over a certain level are ineligible for the EITC, some units became ineligible for the EITC due to counting the BIG benefits in AGI, even though no explicit changes were made to EITC policies.
From page 570...
... Basic Income Guarantee: Policy Employment and Earnings Effects The Committee did not request any employment or earnings effects simulations for either of the Basic Income Guarantee policies. Basic Income Guarantee Policy: Simulation Results The BIG benefits total $882 billion in BIG Policy #1 -- which is equal to $3,000 for each of the 294 million citizens (native-born and naturalized)
From page 571...
... 9.633 -5.381 -3.243 SPM Child Poverty Ratea 13.0% -7.3 -4.4 Selected Program Results       Basic Income Guarantee       People With an Allowance (Thousands) 0 294,008 246,045 Annual Amount of Allowance ($ Millions)
From page 572...
... Policy Package #4 incorporated universal supports -- a child allowance policy and child support assurance, combined with the more-generous EITC expansion, the same CDCTC expansion as in the other two packages, the minimum wage increase, and restoration of legal immigrants' eligibility for safety-net programs. In defining Policy Package #3 and Policy Package #4, the Committee's initial specifications used somewhat less-generous versions of the SNAP policy (in Policy Package #3)
From page 573...
... X Child Allowance Policy #3 ($2,700, Citizens Only, Current Phase-out) X Child Support Assurance Policy #1 ($100 Assurance)
From page 574...
... Simulating Employment and Earnings Effects Due to the Policy Packages Because the Committee's employment and earnings assumptions for various policy areas were developed individually, based on the available literature covering that type of benefit or tax credit, assumptions had to be made regarding the expected combined employment and earnings changes. For example, in the case of Policy Package #1, the EITC policy when modeled individually included new jobs for 307,000 women (based on research on the impacts of EITC expansions)
From page 575...
... The Committee also requested exploratory simulations using a second set of assumptions for employment and earnings changes in the policy packages. Under this alternate set of assumptions, the number of job changes of a particular type was equal to the sum of numbers across the individual policies.
From page 576...
...   Number Who Stop Working 130 130 130 130.0 Policy Package #2 Component Policies EITC #1 Child Care Child na na #1 Allowance   #1   Number Who Start Working 307 600 636 907 771.5   Number Who Stop Working 130 84 215 214 214.5 Policy Package #3 Component Policies EITC #1 Child Care SNAP #3 Housing #2 na   #1   Number Who Start Working 307 600 636 907 771.5   Number Who Stop Working 130 168 95 360 393 376.5
From page 577...
... Policy Package #4 Component Policies EITC #2 Child Care Child Child Immigrant #1 Allowance Support Eligibility #3 Assurance #1   #1   Number Who Start Working 771 600 0 0 1 867 1,372 1,119.5   Number Who Stop Working 198 130 143 12 14 475 497 486.0 a Targets apply only to the policies shown in the table. Policy Package #1 includes additional employment changes due to the minimum wage increase and WorkAdvance policy, and Policy Package #4 includes additional employment changes due to the minimum wage.
From page 578...
... • Policy Package #3 -- including means-tested supports plus work-­ related components, reduced child poverty by 6.6 percentage points -- a drop of 50.7 percent. The number of children removed from SPM poverty was 4.882 million.
From page 579...
... $41,770 $10,706 $10,905 $10,718 $21,471 Federal CTC/ACTC or Child Allowance           Amount of Credit ($ Millions) $45,104 $1,218 $67,564 $599 $113,229 Child Support Assurance           Aggregate Annual Child Support Assurance ($ Millions)
From page 580...
... b The benefit programs included in these figures are unemployment compensation benefits, SSI, TANF, child care subsidies, housing subsidies, SNAP, LIHEAP, WIC, and child support assurance.
From page 581...
... However, there was one exception: the Tax Cuts and Jobs Act of 2017 (TCJA) , which became law on December 22, 2017, and which affects individual federal income taxes starting with tax year 2018.
From page 582...
... Deflation from 2018 to 2015 Dollars Our starting point for the modified baseline simulation of federal income taxes was the tax law in place in 2015 (the year of the input data)
From page 583...
... However, there was no corresponding requirement for the CTC. TRIM3's baseline federal income tax simulation for 2015 models this by denying the EITC to tax units with a head, spouse, or child who is an ­ nauthorized immigrant or a temporary resident (such as a person living u in the United States with a work visa or student visa)
From page 584...
... The expanded CTC/ACTC likely plays a major role in the lower poverty estimate. Simulating the Committee's Policy Changes with the New Tax Law Each of the Committee's individual policy changes and each of the policy packages was re-simulated from the starting point of the modified baseline that included the 2018 tax law.
From page 585...
... $1,254,515 $1,118,904 SPM Child Poverty Ratea     Baseline 13.0% 12.6% Percentage Point Changes in the SPM Poverty Rate From the Baseline (When Policies are Simulated Including Employment and Earnings Effects)       EITC Policy #1 (Increase Phase-in)
From page 586...
... -5.3 -5.0 Child Allowance Policy #3 ($2,700, Citizens Only, 2018   Phase-out) -4.6 -4.3   Child Support Assurance Policy #1 ($100 Assurance)
From page 587...
... . A third set of policies created universal benefits -- child allowances and child support assurance programs.
From page 588...
... 2/3) FIGURE Summary-2 Child SPM Poverty Impacts of Policies to Expand Safety-Net Programs.
From page 589...
... FIGURE Summary-5 Child SPM Poverty Impacts of Policy Packages. FIGURE Summary-5  Child SPM poverty impacts of policy packages.
From page 590...
... . Considering the policies that alter benefit programs or taxes, plus the child allowance and child support assurance policies, the smallest reduction in child SPM poverty (0.1 percentage points)
From page 591...
... However, there are some cases in which a less-expensive policy has greater anti-poverty impact. For example, Child Allowance #1 reduces poverty by 3.4 percentage points but costs about $10 billion less than SNAP #3, which reduces child SPM poverty by 2.6 percentage points.
From page 592...
... . Twenty Three Years and Still Waiting for Change: Why it's time to give tipped workers the regular minimum wage.
From page 593...
... . Reducing Child Poverty in the US: Costs and Impacts of Policies Proposed by the Children's Defense Fund.
From page 594...
... U.S. Census Bureau.
From page 595...
... Urban Institute TRIM3 Project Consultants Linda Giannarelli is a Senior Fellow in the Urban Institute's Income and Benefits Policy Center, who has led or co-led the maintenance and development of TRIM3 for over 20 years.  Her research focuses on the interactions across safety net programs and the use of microsimulation to assess the potential impacts of policy changes on the economic well-being of lower-income families. Laura Wheaton is a Senior Fellow in the Urban Institute's Income and Benefits Policy Center, specializing in analyzing government safety net programs, poverty estimation, and the microsimulation modeling of tax and transfer programs.
From page 596...
... Kevin Werner is a Research Analyst in the Urban Institute's Income and Benefits Policy Center. He focuses on the development and application of TRIM3 to analyze public assistance programs.


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