Broke Kansas To Tax Poor People By Placing $25 Limit On ATM Withdrawals

On Saturday, May 2, Kansas Gov. Sam Brownback left Boss Hawg’s Bar-B-Q without leaving a tip for waitress Chloe Hough. 

It wasn’t that Brownback intended to shortchange his server, but rather when he received his credit card voucher, Hough had marked through the tip line and scribbled the following message to the Governor: “Tip the schools.” 

Around an hour earlier, Hough posted this message on Facebook:

"You guys 911 emergency. It's my last shift and I am waiting on our governor. What should I say to him. This is not a test. Go."

The animosity stems from Brownback’s move to push through a series of tax cuts, an “experiment” which eventually backfired, producing an $800 million funding gap which is in turn squeezing the public sector to the point where some schools are now being forced to file for emergency funding in order to make payroll. 

Here’s a look at the situation...

If, as the above suggests, the Governor was already unpopular with low-income Kansans, the situation isn’t likely to improve anytime soon because as The Washington Post reports, the state will now place a $25 daily limit on ATM withdrawals using a state-issued benefits card. 

Via WaPo:

Legislators in Kansas, not trusting the poor to use their money wisely, have voted to limit how much cash that welfare beneficiaries can receive, effectively reducing their overall benefits, as well.

 

The legislature placed a daily cap of $25 on cash withdrawals beginning July 1, which will force beneficiaries to make more frequent trips to the ATM to withdraw money from the debit cards used to pay public assistance benefits.

 

Since there's a fee for every withdrawal, the limit means that some families will get substantially less money.

 

It's hard to overstate the significance of this action. Many households without enough money to maintain a minimum balance in a conventional checking account will pay their rent and their utility bills in cash. A single mother with two children seeking to withdraw just $200 in cash could incur $30 or more in fees, which is a big chunk of the roughly $400 such a family would receive under the program in Kansas.

 

Since most banking machines are stocked only with $20 bills, the $25 limit is effectively a $20 limit. A family seeking to withdraw even $200 in cash would have to visit an ATM 10 times a month, a real burden for a parent who might not have a car and might not live in a neighborhood where ATMs are easy to find.

So Kansas, in an effort ostensibly designed to ensure that welfare recipients aren’t spending government cash on liquor, fortune tellers, luxury cruises, swimming, or movie watching (see list below), will essentially charge poor people for... well, for being poor. 

Clearly, there are a number of talking points here, but it's worth reiterating the fact that this may wind up being counterproductive.

That is, if someone intended to put say, $300 of their benefits towards a cash rent payment, they would have to go to the ATM on fifteen separate days and pay a fee each time (unless they can find an ATM that dispenses 5s). If they have no checking account (which applies to about a quarter of low-income families, studies show) that means that withdrawing $300 would cost somewhere in the neighborhood of $45 all-in. That's $1 to the state for each withdrawal (the standard fee) plus an assumed $2 bank ATM fee for each trip. That amounts to a sizeable rent increase and will only serve to further impoverish recipients, making it more likely that they will remain dependent on the public purse, thus driving up the cost of the program for taxpayers. 

Whatever the implications turn out to be, Kansas is now (literally) taxing poor people while simultaneously cutting funding to schools after a series of tax cuts for the wealthy bankrupted the state.

Between these types of legislative moves and central bank policies explicitly designed to inflate the assets most likely to be concentrated in the hands of the wealthy, it would appear that exacerbating the wealth divide in America is becoming official government policy.

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Bonus: Here is the official list of places poor people cannot use their welfare money in Kansas as of last month:

PLACES WHERE CASH ASSISTANCE COULD NOT BE USED

- Retail liquor store

- Casino

- Gaming establishment

- Jewelry store

- Tattoo parlor

- Massage parlor

- Body piercing parlor

- Spa

- Nail salon

- Lingerie shop

- Tobacco paraphernalia store

- Vapor cigarette store

- Psychic or fortune telling business

- Bail bond company

- Video arcade

- Movie theater

- Swimming pool

- Cruise ship

- Theme park

- Dog or horse racing facility

- Pari-mutuel facility

- Sexually oriented business or any retail establishment which provides adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment

- Any business or retail establishment where minors under age 18 are not permitted.