2013 u.s poverty economic opportunity campaign strengthen tax credits and asset building for working...

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2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

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Page 1: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

2013 U.S Poverty Economic Opportunity Campaign

Strengthen Tax Credits and Asset Building for Working Families

Page 2: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

2 Economic Opportunity for All Campaign

Income Inequality in America

Page 3: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

3 Economic Opportunity for All Campaign

What is a Tax Expenditure?

• Decreases government revenue.

• Over half of tax expenditures go to the richest 20 percent of Americans.

• Tax credits are the only category that favors low income households.

Page 4: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

4 Economic Opportunity for All Campaign

• Designed to “make work pay”• Targeted to low-income workers• Credit increases as the worker earns more money• Phases out as work-er’s earned income grows• Amount of credit is determined by how many children are in the

family

Earned Income Tax Credit

Page 5: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

5 Economic Opportunity for All Campaign

Why We Love the EITC• The EITC is the largest poverty

reduction program in the U.S.

• 27 million households claimed the EITC in 2012 totaling nearly $62 billion.

• The EITC and CTC lifted 9.4 million Americans out of poverty in 2011.

• The EITC also helps local economies – generates $1.50 - $2.00 for every $1 spent.

Page 6: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

6 Economic Opportunity for All Campaign

Child Tax Credit• Designed to offset expenses of raising children

• $1,000 per child (under 17)

• Must earn at least $3,000 to claim the credit• Partially refundable credit for low(not fully refundable like EITC )

• CTC is largest tax provision benefitting families with children.

• Center on Budget and Policy Priorities estimates the CTC lifted 2.6 million people out of poverty in 2010.

Page 7: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

7 Economic Opportunity for All Campaign

What are the 2009 Improvements? In 2009, the American Recovery and Reinvestment Act made

key improvements to the EITC EITC

Reduced the “marriage penalty” by allowing married couple to earn more before phase-out begins

Increased credit for families with 3 or more children CTC

Reduced income eligibility threshold from $12,000 to $3,000 On average, these changes benefit 13 million households a

year (2009-2011). That’s 25 million children!

Page 8: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

8 Economic Opportunity for All Campaign

How Important are the Expansions?• Changes to the CTC alone brought

900,000 people above the poverty line in 2011.

• In 2011, the 2009 EITC expansions lifted 500,000 people above the poverty line and benefited 10 million people.

• Combined, the EITC and CTC (including expansions) lowered the poverty rate by 2.8 percent and the childhood poverty rate by 6.3 percent.

Page 9: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

9 Economic Opportunity for All Campaign

Current Status• 2009 improvements were extended for 5 years (through

2017) in recent “fiscal cliff” deal (thanks to you!)…

… but tax cuts for wealthy/middle class were made permanent

• House and Senate tax leaders are working to enact comprehensive tax reform in 2013 or 2014

• Starting from a “blank slate” approach, meaning that tax expenditures will not be included unless they keep the tax code progressive, help the economy, or serve other important purpose

• Senate tax leaders want input before July 26

Page 10: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

10 Protecting Key Nutrition Programs

House and Senate: Talk to tax leaders and urge them to strengthen progressivity in the tax code and make the 2009 EITC and CTC permanent in tax reform.Senate:• Senate Finance Committee Chairman Max Baucus (D-

Mont.)• Ranking Member Orrin Hatch (R-Utah)

House: • Ways and Means Committee Chairman Dave Camp (R-MI-

4)• Ranking Member Sander Levin (D-MI-9)

2013 EITC/CTC Request

Page 11: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

11 Economic Opportunity for All Campaign

EITC and CTC Laser Talk

Engage: The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) lifted 9.4 million people out of poverty in 2011.

Problem: Despite the success of the EITC and CTC, important improvements to these credits will expire in 2017. These improvements alone lifted 1.5 million people out of poverty in 2011

Page 12: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

12 Economic Opportunity for All Campaign

EITC and CTC Laser TalkInform: The EITC and CTC benefits millions of Americans, including hard working, full-time employees and 1.5 million current or former members of the military and their children. The EITC and CTC encourage work, and lift more children out of poverty than any other federal program. Let’s not cut supports that help working families who pay many different taxes and make such a difference. House and Senate tax leaders are working now on comprehensive tax reform – any tax reform must strengthen progressivity and protect the EITC and CTC.

Page 13: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

13 Economic Opportunity for All Campaign

EITC and CTC Laser TalkSenate Call to Action: Will you submit a letter to Senator Finance Committee Chairman Max Baucus and ranking Member Orrin Hatch, urging them to strengthen progressivity in the tax code by making the 2009 improvements to the EITC and CTC permanent?

House Call to Action: Will you speak with House Ways and Means Committee Chairman Dave Camp (R-MI) and Sander Levin (D-MI) and urge them to strengthen progressivity in the tax code by making the 2009 EITC and CTC improvements permanent? Will you show your support for working families by co-sponsoring the Child Tax Credit Permanency Act (H.R. 769) and the Earned Income Tax Credit Improvement and Simplification Act (H.R. 2116)?

Page 14: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

14 Economic Opportunity for All Campaign

Building Savings and Assets

Why do savings and assets matter?

•Improve Household Stability

•Create an orientation toward the future. 71 percent of children born to high-saving, low-income parents move up from the bottom income quartile over a generation.

•Enhance the welfare of children. Children with a savings account in their name are six times more likely to attend college than those without an account.

Page 15: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

15 Economic Opportunity for All Campaign

Wealth Inequality in America

Page 16: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

16 Economic Opportunity for All Campaign

The Financial Security CreditDesigned to make saving easy, convenient, and worthwhile for low-income people•Opportunity: Tax time is generally when low-income taxpayers receive their •largest check of the year (from EITC and CTC)•Ease: Tax filer checks a box on tax return agreeing to depositing all part of refund into an eligible savings product (e.g. IRA, 401k, education account, Treasury bond)•Incentive: Low-income taxpayers would receive a dollar-for-dollar match for their deposits, up to $500 per year.

Page 17: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

17 Economic Opportunity for All Campaign

FSC in Action: SaveUSA• SaveNYC started in 2008; expanded to SaveUSA in 2011• Tax filers agree to deposit part of their tax refund into a savings account• If they held their initial deposit for at least one year, they received a match

Page 18: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

18 Economic Opportunity for All Campaign

Opportunity — The Bonus takes advantage of a time when people have extra cash they can save.

Convenience — The Bonus allows people to sign up right on their tax returns without excessive time and

paperwork.

Incentive — Matching part of the deposits made by the taxpayer provides an strong motivation to begin saving.

Building a Future — With a stable source of savings and assets, low-income households can begin to break the cycle of poverty and build a future for them and their children.

Page 19: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

19 Economic Opportunity for All Campaign

Other Asset Building StrategiesIndividual Development Accounts (IDAs)

o Matched savings accounts (up to $500/yr) for education, retirement, home, etc.

o Financial literacy classes.o 85,000 IDAs have been opened resulting in 9,400 new

homeowners, 7,200 educational purchases, and 6,400 small business start-up and expansion purchases.

Children’s Savings Accounts (CSAs)o Government funded savings account for all children at birth.

Saver’s Credito $1,000 tax credit for low-income households contributing to a

retirement account.

Page 20: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

20 Economic Opportunity for All Campaign

House and Senate: Urge tax leaders to expand policies that help low-income Americans save. In particular, urge them to include the Financial Security Credit in tax reform.Senate:• Senate Finance Committee Chairman, Max Baucus (D-Mont.)• Ranking Member, Orrin Hatch (R-Utah)

House: • Ways and Means Committee Chairman, Dave Camp (R-MI-4)• Ranking Member, Sander Levin (D-MI-9)

2013 Assets Request

Page 21: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

21 Economic Opportunity for All Campaign

Assets/FSC Laser Talk

Page 22: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

22 Economic Opportunity for All Campaign

Assets/FSC Laser Talk

Page 23: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

23 Economic Opportunity for All Campaign

Assets/FSC Laser TalkSenate Call to Action: Will you submit a letter to Senator Finance Committee Chairman Max Baucus and ranking Member Orrin Hatch, urging them to invest in policies that help low-income families save? In particular, will you talk to them about the Financial Security Credit and urge them to include it in any tax reform legislation?

House Call to Action: Will you submit a letter to House Ways and Means Committee Chairman Dave Camp (R-MI) and Sander Levin (D-MI) and urge them to invest in policies that help low-income families save? In particular, will you talk to them about the Financial Security Credit and urge them to include it in any tax reform legislation?

Page 24: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

24 Economic Opportunity for All Campaign

Economic Opportunity Resources

• RESULTS: www.results.org• New America Foundation’s Asset Building Project:

www.assetbuilding.org• Corporation for Enterprise Development: www.cfed.org• Center on Budget and Policy Priorities: www.cbpp.org• National Community Tax Coalition: www.tax-coalition.org• Center for Tax Justice: www.ctj.org• Coalition on Human Needs: www.chn.org• Half In Ten: www.halfinten.org

Page 25: 2013 U.S Poverty Economic Opportunity Campaign Strengthen Tax Credits and Asset Building for Working Families

RESULTS/RESULTS Educational Fund 1730 Rhode Island Ave NW, Ste 400

Washington DC 20036

RESULTS Economic Opportunity Campaign Contacts:Meredith Dodson, [email protected], (202) 782-7100, x116

Jos Linn, [email protected], (515) 288-3622

www.results.org