by Tom Yamachika, President, Tax Foundation Hawaii
One of the most visible crises to hit us in recent years is the problem of the homeless. Certainly, the issue has been around for a very long time, but the problem seems to have intensified in recent years between the general economic malaise that has lingered since the 2008 economic meltdown and the influx of Compact of Free Association (COFA) island migrants.
I'm not about to tell you that I have a solution to the problem. But it does seem that the problem has many facets, and so we shouldn't be talking about only providing housing, or only providing services, or only throwing money at the problem. A coordinated approach is sorely needed. Our Governor’s appointment of an interagency coordinator to direct the effort seems like a step in the right direction.
Coordinated action is not what our government normally does. We normally identify a problem and a half dozen approaches, and then try to implement all of them, often without regard to any issues that might arise because of the cross-pollination.
In the tax system, for example, we try to fight poverty. But we apparently don’t think it wise to increase the threshold income amount below which folks don't even have to file a return and deal with the tax system. Instead, not only do we try to force people with incredibly low income levels to navigate through income tax returns, but we increase the complexity for those people with additional forms and schedules. We have a low-income household renter’s credit. We have a credit for child and dependent care expenses. We have a food/excise tax credit. And our laws provide that if a person who might be eligible for a credit doesn't claim it in a year, the credit goes poof and can't be claimed, ever.
Tax credits, furthermore, have a couple of additional characteristics that make them a tough fit for poverty aid. First, the credits all result in one single check, issued just once in a year. What does a poor person or poor family do during the rest of the year while waiting for the check? Do they get refund anticipation loans, which typically are provided by specialized lenders who charge rates and fees that can reach over 450% in annual percentage rate (APR), according to legislative testimony from the Hawaii Appleseed Center for Law and Economic Justice? And if we are talking about a homeless person, to what address do we mail the check?
Finally, we can't be blind to the fact that when free financial aid is given out, there will be people who will want to take some even though they don't qualify. Our tax department has a hard enough time separating legitimate from fraudulent claims when the claimants have addresses, phone numbers, and Social Security cards. Are they adequately equipped to deal with the same problems with claimants missing one or more of the above?
This all goes back to the coordination of effort. Offices of government have their areas of expertise. Aid mechanisms, such as housing vouchers, electronic benefits/food stamps, and assistance services have their strengths, competencies, and weaknesses. A truly coordinated approach needs to align the strengths and competencies while avoiding the weaknesses.
We then need to apply the idea of “coordinated approach” to other issues that have been plaguing the workings of our government for decades.