Savings

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include housing, taxes and wealth gaps, the safety net, and financial products.

Editor’s note: This post was authored by Lauren Pescatore, Debbie Stein and Amy Greene of TaxCreditsForWorkingFamilies.org, a website dedicated to educating and informing advocates and public officials about the importance of the state and federal tax credits to working families. Their site includes a 50 State Resource Map that serves as a quick reference guide as to the status of tax credits across the country.

Because so many low- and middle-income families live paycheck to paycheck, tax refunds are prime opportunities—sometimes the only opportunity—for families to save. Refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit not only offset some or all of these working families’ federal income taxes; they often  provide additional income to help offset other types of taxes. Because they are refundable, if the size of a family’s credit exceeds the amount of income tax it owes, the family receives the difference in the form of a refund check. The Child and Dependent Care Credit, although not currently refundable, can also provide significant tax savings for working parents with child care expenses. These credits provide many working families with a lump sum refund that they can save or invest. 

Academic research is sometimes said to “collect dust on the shelf.” A recently published report shows this is not always the case.

The Assets and Education Initiative at the University of Kansas’ School of Social Welfare and the Center for Social Development at Washington University in St. Louis, along with their partners, bridge this gap between research and application. By producing solid research and engaging with policymakers, practitioners, and advocates, AEDI and CSD inform policy initiatives and bring their research to practice.

Earlier this week, the Assets and Education Initiative of the University of Kansas School of Social Welfare and the Center for Social Development at Washington University in St. Louis released a report, “Linking Savings and Educational Outcomes: Charting a Course for Scholarship and Policy,” documenting some key findings from their symposium earlier this year. From children’s savings accounts to the Department of Education’s new GEAR UP initiative to reducing college debt, the report explores interventions that could put higher education in reach for all.

Editor's note: This post was authored by Jessica Bartholow. She has a Masters in Political Science and is a Legislative Advocate for the Western Center on Law and Poverty. 

With the year end approaching, it is still uncertain whether the U.S. House of Representatives will call for a floor vote on the Federal Agriculture Reform and Risk Management Act (FARRM) of 2012 (H.R. 6083) which makes $16.5 billion in cuts to the federal Supplemental Nutrition Assistance Program (SNAP), despite statements by leadership earlier in the month that a vote would be called.

A new study released this week examines a critical policy design question: what is the most effective way to increase retirement savings, including among lower-income workers? Most notably, the study finds that while tax subsidies to retirement savings result in a negligible increase in overall savings, “nudge” policies like automatic enrollment and default contributions boost retirement savings without corresponding decreases in other accounts. As noted in the N.Y. Times Economix blog, this research may have serious policy implications for tax reform in the U.S. – particularly as Congress seeks to raise revenue through lowering tax expenditures.

Yesterday, Half in Ten released its annual report about the state of poverty in America. The Right Choices to Cut Poverty and Restore Shared Prosperity analyzes a broad set of indicators and serves as a needed call to action for the anti-poverty community. In 2011, 15% of all Americans lived beneath the federal poverty level. Women, children, people of color, and people living with disabilities all experienced higher rates than this average. Despite these disparities and the lingering impact of the recession, Half in Ten notes the role public policies and programs have played in mitigating the spread of poverty. Programs such as the Earned Income Tax Credit and SNAP (food stamps) played an instrumental role in supporting both the work efforts and basic needs of people living in or near poverty.

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include housing, poverty, financial products, and government assistance programs.