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Group Urges Change In Defining Poverty

Mon., May 1, 1995, midnight

The federal government’s definition of poverty should be based on disposable income, not income before taxes, according to a National Academy of Sciences report issued Sunday.

Changing the basis to disposable income would alter dramatically the profile of America’s poor, increasing the number of working people classified as poor and lowering the percentage of poor who receive cash welfare, the report said.

The proposal also would add the value of such benefits as food stamps, school lunches and public housing when considering an individual’s income. But it would subtract taxes, child support payments, medical costs, health insurance premiums and some work-related expenses.

Under the proposed measure, people in families on welfare would make up 30 percent of the poor, compared with 40 percent now. And people in working families would account for 59 percent of the poor under the new measure, while they make up 51 percent under the current system.

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