CFED
Stay Informed!
The Inclusive Economy
Vital Tax Credits and Asset Building Opportunities
Posted on 09/23/2010 @ 10:56 AM
EDITOR'S NOTE: This blog comes to us by way of Lucy Mullany of the Center for Economic Progress in Chicago. Use the comments feature below to ask questions or leave comments for Lucy.
In the last 1 or 2 weeks before Congress breaks for recess and fully hits the campaign trails, the conversations on the Hill and in the media has focused heavily on the expiring tax cuts. In addition to the Economic Growth Tax Relief Reconciliation Act (EGTRRA) tax cuts from the Bush era, the tax cuts included in the 2009 American Recovery and Reinvestment Act (ARRA or the Recovery Act) are also set to expire. The Recovery Act included tax cuts and spending initiatives designed to boost the nation’s ailing economy. However, the biggest success of the Recovery Act was the steps it took toward a more fair and just tax code - a tax code that provides working families to stabilize their finances and begin to build assets.
The Recovery Act included expansion of and reforms to tax credits that make a huge difference for low- and moderate-income workers hit by a decrease in wages and a cut to supportive social programs. These vital tax credits include: expansion of the Earned Income Tax Credit (EITC) for families with three or more children and married couples; expansion of the refundable portion of the Child Tax Credit (ETC); creation of the Making Work Pay Credit (a $400 credit that benefits 95% of taxpayers); and creation of the American Opportunity Tax Credit, which replaces and expands the existing HOPE education credit.
The National Community Tax Coalition (NCTC) is comprised of free tax preparation and asset building programs around the country. A majority of our programs operate Volunteer Income Tax Assistance (VITA) sites. During the 2010 filing season, we saw a much needed increase in our clients’ tax refunds – especially from the Child Tax Credit. A single mother with two children working full-time at minimum wage ($14,500) received a child tax credit of $1,750. If the credit is reset to the 2001 levels, the mother would only receive $270.
Not surprisingly, the size of the refund often provides an incentive to the taxpayer to make a decision to constructively use the dollars they receive. Thanks to the changes that the IRS and Treasury have made to the tax form and the efforts of many VITA programs to provide asset building services at the tax sites, it has becoming easier for clients to save a portion of their refund. It is now easy for taxpayers to split their refund or purchase a U.S. savings bond through the tax return. Meanwhile more VITA programs are offering year-round financial coaching and asset building services. Many programs across the country are also working with financial institutions and local credit unions to help taxpayers open checking or savings accounts and access various savings and money management products at tax time.
As we participate in the 2010 CFED Assets Learning Conference and learn from and with our colleagues in the field, it’s important that we not forget what is currently at stake legislatively. If these vital tax credits are not expanded, working families won’t have the income support they need to build future assets. To learn more about these refundable credits see NCTC’s recent policy brief, check out Thursday’s session on Tax Time Asset-Building Innovations, and stop by NCTC’s booth in the Innovation Marketplace to take action!
Copyright © 2012 CFED – Corporation for Enterprise Development 
1200 G Street, NW Suite 400 Washington, DC 20005 202.408.9788
Powered by ARCOS | Design by Plus Three
Comments
Leave a Comment