The Earned Income Tax Credit and the Lottery

I don't enjoy gambling. I live in a town with several casinos and don't really have any interest in using them for gambling. I've never even bought a lottery ticket before. Maybe a scratch game once or twice, but never a lottery ticket.  Until this week.

It started as a joke. The odds are incredible, but for 48 million dollars, I thought, "why not this once" I've read about how for some people in poverty, playing the lottery is a type of remittance. While it is a small amount to pay out regularly, the sudden infusion of cash ($50-$200) is how they pay for those things they need irregularlly - like new clothes, technology upgrades, and stocking up on personal items or entertainment devices.

Buying the lottery ticket didn't start as a savings plan; it was entertainment. I was surprised by the amount of entertainment that it gave me. It was a tangible thing , this piece of paper, that induced dreams. [The only other piece of paper that inspires such dreams is my voting ballot.] What would I do with 48 million dollars? Daring to dream that big is a place far from the economic reality of my life, and of anybody's life. I spent time dreaming aloud, something that doesn't get to happen often for people trapped in the tyranny of the moment that is poverty.

Then today, I was reading up on current US policies related to asset building and it reminded me about the Earned Income Tax Credit (EITC).

"Despite the curtailed policy agenda, the Fiscal Year 2012 budget includes a set of policies and proposals that allocate $519 billion in resources to asset-building activities. An additional $65 billion in funding for the Earned Income Tax Credit and Child Tax Credit, while not explicitly asset building programs, presents resources that individuals and families can devote to saving."


There is this continuing question in the EITC funders world [and middle-class sensibilities] of why people don't always use their EITC for its intended purpose of family asset building. There is evidence many many families use it to pay off debts - something which is responsible, but that still isn't asset building for the future. Then it dawned on me.  To people living on under $12,000 a year, their tax return is like winning the lottery.

When you think about what you are going to do with your tax return, you dream. You dream of the things which you know are out of reach on a regular basis. You plan on buying cars, televisions, movies, entertainment, restaurant food, vacations, ect. ect. Five-thousand dollars in one lump sum might as well be a million dollars. People in poverty often get unfairly judged for this behavior and called "irresponsible spenders."

While I could imagination how to split up my $48 million dollars so I could live modestly for a lifetime, I still dreamed of what $$ could do that I can't do now. It was a lot of fun.

Take that fun away by talking about asset building won't persuade people to change their behavior. What we need to do is develop a positive dream of the possibility of a secure life. We as a society, and as social service agencies, don't always give people a goal of what to be, only of what NOT to be.

With a new American Dream, maybe then tax returns won't be treated like we won the lottery.