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Center for Economic Progress

Tax Time is the Time to Save David Marzahl Executive Director Center for Economic Progress New America Foundation Capitol Hill Event Washington, DC April 21, 2009. Center for Economic Progress. Mission: The Center for Economic Progress helps hard-working, low-income families move from

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Center for Economic Progress

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  1. Tax Time is the Time to SaveDavid MarzahlExecutive DirectorCenter for Economic ProgressNew America FoundationCapitol Hill EventWashington, DCApril 21, 2009

  2. Center for Economic Progress Mission: The Center for Economic Progress helps hard-working, low-income families move from financial uncertainty to financial security. Tax Preparation Financial Services Federal Advocacy • 33 tax sites throughout Chicago and Illinois • 31,912 tax returns prepared by volunteers • $41.8 million in tax refunds returned to families and reinvested in communities • $20.4 million in Earned Income Tax Credits • 1,292 bank accounts opened • 250 prepaid debit cards issued • 156 clients invested $22,350 in Savings Bonds • 702 FAFSA applications completed • Leads the National Community Tax Coalition (NCTC) • Policy Victory: $8 million federal VITA Grant Program established • Policy Victory: Child Tax Credit expanded

  3. National Community Tax Coalition The National Community Tax Coalition (NCTC) is a vast and vibrant network of 600 affiliates, from all sectors of society, representing the community-VITA field. Our mission is to broaden the reach and impact of community financial services, while being a strong voice in Washington, DC for low-wage workers and low-income families. Major National Partners • United Way of America • National Disability Institute • City of New York • Internal Revenue Service Largest VITA Programs • Empire Justice Center, NY • AccountAbility Minnesota, MN • City of San Antonio, TX • United Way of the Bay Area, CA

  4. The Impact of Community-VITA • 1.2 million tax returns prepared for low-income workers • $1.1 billion in tax refunds received by low-income families • VITA clients saved $177 million in return preparation costs • EITC clients avoided $8 million in Refund Anticipation Loan (RAL) fees 2008 Accomplishments WHAT IF Tax Prep. Fees were invested in U.S. Savings Bonds? • Series I Bonds currently earn 5.64% interest • At this rate, it would only take 12.5 years for an initial investment to double in value

  5. Financial Security forAmerican Workers Financial Inclusion Financial Direction Financial Opportunity • Direct Deposit and split refunds • Prepaid debit cards through bank partners • Low-cost bank products available onsite • Credit counseling and credit reporting • Financial coachingand financial education • Alternative RALs and other short-term loans • Short-term savings products available onsite (Savings Bonds, CDs, and IRAs) • Matched savings programs (IDAs and CDs) • 2008 Survey of NCTC Affiliates: • 2 out of 3 connect clients to banking services • 1 out of 4 offer credit counseling or enable clients to access credit reports • 25% offer savings products (e.g., CDs and Savings Bonds) onsite

  6. NCTC Affiliate Profile #1: Access to the Financial Mainstream Financial Product Innovation • Partnering with the Community Financial Resource Center to offer clients low-cost, prepaid debit cards • Prepaid debit cards are available to all clients, but are especially popular with the unbanked population • Cards are like a regular VISA debit card and allow for direct deposit of paychecks • Issued 532 cards this tax season; five-fold growth from last year Campaign for Working Families – Philadelphia, PA

  7. NCTC Affiliate Profile #2:Avoiding and Managing Debt RefundExpress Program • Partnering with the San Antonio Generations Federal Credit Union to offer zero percent interest Alternative RALs • Consumers establish a mandatory savings account at the credit union • Offered 2,500 Alternative RALs; an average loan of $2,440 per client Department of Community Initiatives – San Antonio, TX

  8. NCTC Affiliate Profile #3:Opportunities to Save and Invest Smart CD • 5-Year certificate of deposit (CD) offered through Franklin Savings Bank • Only available to VITA clients who are EITC recipients • Savers who do not withdraw from the CD receive a $100 match after six months and an additional $100 match after one year Franklin Asset Building Coalition - Concord, NH

  9. Policy Recommendations • Expand Free Services for Low-Income Workers • Increase funding for the federal VITA Grant Program • Extend financial counseling services to low-income families • Design Financial Products for Low-Income Workers • Make access to direct deposit universal • Sponsor pilot programs to drive innovation • Target Savings Incentives at Low-Income Workers • Make federal savings credits available to all working families • Adopt a federal matched savings program for short-term needs Financial Uncertainty  Financial Security

  10. David Marzahl Executive Director Center for Economic Progressdmarzahl@economicprogress.org Visit us on the web at:www.economicprogress.org

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