Meegan Dugan Bassett, Fellow, New America Chicago
A brilliant policy isn’t worth much if people can’t figure out how to benefit from it. We need to see delivery as a core part of policymaking.
I’ve been just as guilty of it as anyone else working in the public policy world. A bunch of people with good intentions sit at their desks and hold meetings to hammer out the details of a policy to fix an urgent problem. Perhaps it’s a bill to improve access to school funding or a program for the elderly. For me, it usually involved policies to boost low-income adults’ access to financial aid so they can attend college and build a better life.
But it doesn’t matter how angelic your intentions are or how thoughtfully you craft a policy if one thing is neglected: delivery. That happens all too often because delivery ain’t sexy.
Here’s an example to illustrate the problem. Illinois has a wonderful need-based financial aid program for undergraduate students called the Monetary Award Program (MAP). Unlike many state aid programs, it is open to people of all ages who want to attend college. Grants are awarded on a first-come first-served basis.
Over the years, my former colleagues and I worked hard with legislators, colleges and the state commission that oversees the grant program to make sure it stayed open to low-income adult students. This is important because many low-income people can’t afford to take the traditional path through college; they may work full-time while attending school and take breaks on the way to graduation. This is a common path for many students of color, so older students’ access to aid is a basic equity issue.
But delivery issues can easily make what looks like an equitable policy on paper become something else. In the case of MAP, years of increased demand for college degrees coupled with stagnant appropriations meant the program ran out of money earlier and earlier each year. The first-come-first-serve delivery model didn’t change, so the program began to inadvertently concentrate resources on traditional college-age students. Nontraditional students, who are often balancing work and childcare responsibilities, are much more likely to apply close to the beginning of the academic year, in July or August. But because MAP grants started running out in February, adult students became far less likely to get grants compared to 18-year-olds.
Completely unintentionally, the delivery of the program determined who got the dollars and who didn’t. All of which is to say: Delivery is policy. But policymakers don’t focus on delivery. That’s the realm of administrators and bureaucrats, right? Dreamers and changemakers rarely give it much thought.
Making the EITC an Easy Win
The federal Earned Income Tax Credit is another case in point.
The EITC has been shown to lift people out of poverty, improve work participation rates and improve outcomes for children. It’s become a popular topic among policymakers because it is arguably one of the most effective anti-poverty initiatives in American history—and it has bipartisan support.
But around $10.5 billion in EITC funds are left unclaimed by working people each year. It’s not because they don’t want the money. The online process of determining whether you are EITC-eligible involves a soul-crushing series of questions. The basic tax return form is unclear about what to put in the EITC line. And if you have children, you’ll need to complete a second tax form.
Heightening the problems surrounding the credit, EITC-eligible people are often targeted by unscrupulous tax preparers who have an incentive to either inappropriately claim it on behalf of clients or take large portions of the credit in fees and charges.
To address all these issues, Code for America created an online portal to help people understand if they are eligible and connect with Volunteer Income Tax Assistance (VITA) program sites, which offer free volunteer tax preparers. The portal is now being tested in collaboration with VITA sites. This exciting project could shed light on what can be done to help more people obtain the EITC.
But let’s step back a bit for a wider view on this particular delivery landscape. Many developed nations don’t even require people to fill out their own tax forms. This is because for most taxpayers, governments already have most of the information needed.
But here in 21st century America, despite our love of innovation and efficiency, fear of government has caused us to hold on to an incredibly complicated and outdated tax filing process. As Stanford Law Professor Joe Bankman once noted, filling out a tax form is like a credit card company sending you a blank page and asking you to fill in your credit card purchases instead of sending you a statement.
Why not instead just let people know they are eligible, ask them to confirm or correct their information and have a streamlined tax return form that already includes their basic information?
Better Ways Have Already Worked
In fact New York City, the state of California and other locations have already tested this approach.
Past efforts in these places have used wage data already reported to a taxing body to notify people they may be eligible for the EITC and streamline the tax. A program in California contacted people with simple income sources using paper-based state returns and let them know they may be eligible for the EITC based on their wage data and other submitted data. Taxpayers were asked to confirm or correct a pre-filled paper return. They had the option to discard it or file electronically. Participants raved about how easy and straightforward the process was.
New York City created a partnership between the city and the Internal Revenue Service to alert EITC-eligible individuals who filed taxes but didn’t claim the credit that they were eligible for. It provided paper-based amended returns to simplify the process for taxpayers. Around 30 percent of recipients responded each year, leading to an additional 22,000 low-income households claiming $14 million in EITC funds and state and city matches.
Using modern technology and learning from the lessons of the New York City and California efforts to make these tax credits more accessible, shouldn’t we be able to digitize this process? It would put tax dollars back in the pockets of hard-working Americans in struggling communities all over our country.
If the EITC and other effective policy solutions are to fulfill their potential, we must erase any conceptual divide between policy making and delivery. It’s a false dichotomy. Instead, delivery mechanisms must be treated seriously and thoughtfully from the start. Designing solutions to help people benefit from well-meaning policies has to involve learning directly from end users and collaborating with the many people behind the scenes who make our government programs and services possible. This approach is unfamiliar for most policymakers and advocates. And it can be challenging. But I’m convinced it is one of the best ways for our government to deliver on its promise to make life better for all Americans.