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A U.S. Census Bureau report, The Effects of Government Taxes and Transfers on Income and Poverty: 2004 was released today. The report provides alternative national poverty rates that range from 8.3 percent, using a more comprehensive definition of income that includes the value of noncash benefits and excludes taxes, to 19.4 percent, using another definition of income that excludes all government payments and does not deduct taxes. The official U.S. poverty rate of 12.7 percent was announced last summer.
This is part of an ongoing Census Bureau effort to understand economic well-being and poverty in America. The Census Bureau has been working to streamline and simplify the many ways to consider the poverty rate. As a result, this report includes fewer alternative definitions of income and poverty.
The report presents three alternative definitions of 2004 income. These estimates take into account the extent to which noncash benefits and taxes — which were not considered in the official measures released in August 2005 — affect median household income, the poverty rate and income inequality.
The alternative estimates deduct taxes from money income and add the value of various noncash benefits (such as food stamps, school lunches and housing subsidies) and are intended to provide a more complete measure of economic well-being than the income definition that is used in the official poverty measure, which is based solely on the amount of money received during the calendar year.