Helping homeless through common-sense tax reform

What if there were a way to cut taxes and simultaneously reduce spending without cutting public services for homeless individuals? Currently, many homeless individuals receiving Supplemental Security Income, or SSI, benefits have few alternatives for income: either remain unemployed and continue receiving SSI benefits, or re-enter the workforce. Even in San Francisco, where the minimum wage is $15 per hour, they’d have to work at least 20 hours a week just to make as much as they did with their SSI benefits. This places homeless individuals in an unintended precarious position. Many are afraid to re-enter the workforce part time in fear that their wages would be less than their current benefits, and entering the workforce full time can be very difficult for someone with no safe place to shower, do laundry or sleep. A lot of the time, for SSI recipients, the best-case scenario is to find something under the table, otherwise, panhandling and recycling are what many turn to for additional income.

The solution to obviate the fear of getting back in the workforce would simply be for the government to cut payroll taxes for homeless individuals who opt out of SSI benefits and re-enter the workforce. Here is how it would work. The individual would have the option to work without being taxed in conjunction with opting out of their SSI benefit. They’d be able to opt back into SSI if they were to lose their newly attained position. A simple sliding income scale would determine whether the individual qualifies for the program.

The qualification test would be to simply determine whether payroll taxes on the individual would exceed their SSI benefits. If their payroll taxes were less than their SSI benefits, the individual would qualify. If the government could forgo giving an individual $910 a month, in exchange for letting that individual keep $495 a month, this not only incentivizes the individual to re-enter the workforce (something we know political parties care much about), but it could save billions in revenue for the federal government in SSI payouts.

The positives here are simple; government savings, and increased financial security for the poor. Let people opt in and out of SSI between unemployment and employment, any time that the amount that they would receive in government benefits is more than what they would pay in government taxes. Let them keep the money they earned and allow them to not pay payroll taxes.

According to the Social Security Administration, 42,999 SSI recipients in San Francisco receive more than $27 million annually in benefits. Only 5% were able to work December 2017. Assuming that 5% made minimum wage and opted into the tax savings solution I propose, that would be a savings of $1.4 million per year in San Francisco alone. That is how common sense tax reform can effectively combat homelessness.

Logan McDonnell is the senior director of development for Downtown Streets Team and raises money to assist individuals experiencing homelessness throughout the Bay Area. He can be reached via email at loganpmcd@gmail.com.