4 Bold Policies Introduced in Congress to Improve Financial Well-Being
The first quarter of the year has been a busy time on Capitol Hill for Prosperity Now. We’ve been thrilled to see several innovative pieces of legislation introduced that leverage tax season and boost resources for U.S. workers – all in service to helping working families enhance their short and long term savings.
Four critical bills have been introduced during this session that can make a difference in the financial lives of families:
The Refund to Rainy Day Savings Act: Leveraging Tax Refunds to Build Financial Stability
Tax refunds are a great way for low- and moderate-income (LMI) households to build short-term savings. However, since tax refunds only come once a year, many working families find it hard to set some of their refund aside for later.
The Refund to Rainy Day Savings Act was drafted as a support to these families who need their tax refunds to work to their advantage. Introduced in the Senate by Senators Cory Booker (D-NJ), Tom Cotton (R-AR), Doug Jones (D-AL) and Todd Young (R-IN); and for the very first time, in the House by Representatives Bonnie Watson Coleman (D-NJ-12) and French Hill (R-AR-2), this legislation has the potential to help working families use their tax refund to save at tax time as well as throughout the year.
The bipartisan bill helps tax filers set aside a portion of their refund as emergency savings for later in the year. The legislation would also establish a pilot program to gauge the impact of matching funds with lower-income tax filers. Lastly, this bill includes language to expand the flexibility of the innovative Assets for Independence (AFI) grant program, which encourages earnings, savings and self-sufficiency by offering matching funds and other incentives to help low-income workers save their own money and build assets. Read more
The Saving for the Future Act: Taking Workplace Savings to the Next Level
In response to the harsh economic realities facing so many working families today, Senators Chris Coons (D-DE) and Amy Klobuchar (D-MN), and Representatives Scott Peters (D-CA-52), Lucy McBath (D-GA-6) and Lisa Blunt Rochester (D-DE-AL) introduced the Saving for the Future Act, which would require all working Americans to have a minimum amount of short- and long-term savings.
By building upon proven models of workplace retirement savings, such as 401(k)s, defined benefit pensions and emerging state-backed savings plans, the Saving for the Future Act calls on employers to contribute 50 cents for every hour worked by their employees to a government-run retirement account. The legislation also calls for workers to be automatically opted in to the program at a contribution of four percent of their own earnings. To build emergency savings, the first $2,500 in savings a worker accumulates through the legislation goes to a safely-invested, government-run savings account designed for short- and medium-term savings. Read more
The Working Families Tax Relief Act: Making Tax Credits Work for Working Families
Last week, Senators Sherrod Brown (D-OH), Michael Bennet (D-CO), Dick Durbin (D-IL) and Ron Wyden (D-OR) introduced the Working Families Tax Relief Act to expand proven methods to build savings for LMI households through the tax code. So far, 46 Senators have co-sponsored this proposal that dramatically boosts support for working families at tax time.
This bill would increase the value and accessibility of key tax credits. The Working Tax Relief Act expands the Earned Income Tax Credit (EITC) for childless adults and families; makes the Child Tax Credit (CTC) stronger for lower-income households and families with young children; increases the effectiveness of low-income tax credits in Puerto Rico; and creates paid tax preparer regulations. Read more
The VITA Permanence Act: Putting Free Tax Preparation into Law
Representatives Danny Davis (D-IL-7) and Brad Wenstrup (R-OH-2) introduced the VITA Permanence Act, a bipartisan bill to codify the Volunteer Income Tax Assistance program (VITA) into law. This bill was included in the Taxpayer First Act of 2019, which passed in the House in early April. A Senate version is awaiting a vote.
This legislation would permanently authorize the VITA program, and allow funding for the program to go up to $30 million. This would allow the IRS to continue training and certifying VITA volunteers, ensuring that VITA sites remain accurate and save taxpayers money. Read more
Ultimately, these bills all work to help working families move closer to building wealth in order to secure a stable future. Please join us in taking action in support of this legislation by contacting your members of Congress!