INDIANAPOLIS – Indiana is in the middle of the pack when it comes to the overall financial well-being of its residents, according to a recent state-by-state analysis. But while the 2014 Assets and Opportunity Scorecard ranked Indiana 31st among the states for financial security, it also found more than 44 percent of Hoosiers are liquid-asset-poor, meaning they have little or no savings to cover emergencies.
According to a professor of economics at Indiana University Southeast, Eric Schansberg, Indiana is one of several states that impose income taxes on the working poor, and that’s hurting those who have trouble making ends meet.
“If you’re struggling to make it and your income is at the poverty line, I think one could reasonably argue that you shouldn’t be paying taxes to the state; you need all the money you can just to get by,” he declared.
The scorecard ranked Indiana 17th for policies that help struggling families.
One notable policy measure the report finds in Indiana is a state Earned Income Tax Credit. While the report recommends the state credit should be at least 15 percent of the federal credit and Indiana’s is 9 percent, Schansberg said it still helps.
“The Earned Income Tax Credit can offset some of the amazing damage that FICA taxes do to the working poor,” he said. “If you’re at the poverty line you lose about $3000 per year to FICA taxes and no one seems to talk about that.”
FICA refers to the taxes that fund Social Security and Medicare.
Schansberg said the scorecard does a good job of tallying the complex factors influencing poverty, and adds that those factors should be taken into consideration as state leaders make policy decisions.
“You start with education and health care and the Earned Income Tax Credit, and so anything that makes a substantive difference, from skills and education to the way we treat people once they get in the labor market, all of those would be big steps forward for Indiana,” he said.
Across the country in general, the report found a continuing decline in economic mobility and widening wealth and income inequality.
The scorecard is at http://assetsandopportunity.org./