Upside Down: How Tax Cuts Reward the Wealthy and Threaten Anti-Poverty Programs

1. Upside Down: How Tax Cuts Reward the Wealthy and Threaten Anti-Poverty Programs Jeremie Greer July 24, 2017

2. Agenda • Prosperity Now’s Mission and Approach • The Racial Wealth Gap • Upside-Down Tax Code & Right-Side Up Tax Policies • Protective & Progressive Tax Policy Advocacy • Audience Q&A • Next Steps & Close

3. Prosperity Now’s mission is to ensure everyone in our country has a clear path to financial stability, wealth and prosperity.

4. Our Unique Promise We open doors to opportunityfor those who have been kept off the path to prosperity. We help people build wealth by making sure they have what they need to build a better future. We enable meaningful mobility through research, policies and solutions.

5. Our Approach

6. The Challenge `` Liquid Asset Poverty measures the percentage of those who lack savings to cover basic expenses for three months if job loss, a medical emergency, or other crisis leads to a loss of income—$6,150 for a family of four 37% Source: 2017 Prosperity Now Scorecard

7. The Challenge Nationally LIQUID ASSET POVERTY UNDERBANKED UNBANKED 20% 7% 37% Have a bank account but still use check-cashing or pay day loans Don’t have a checking or savings account Households don’t have enough savings to live above the poverty line for three months Source: 2017 Prosperity Now Scorecard

8. Disparities by Race Source: 2017 Prosperity Now Scorecard

9. A vision that powerfully articulates the promise of an economy where everyone can prosper Concrete solutions to create opportunity and reduce inequality A constituency to engage and mobilize in support of policies and solutions that expand opportunity Addressing structural barriers to opportunity embedded in federal, state and local policies What Works Building blocks for change: Prosperity in Reach

10. Closing the Racial Wealth Divide $17,600 45% 50% Households of Color 71% $127,200 28% White Households Objectives • Developa clear organizational position on the drivers of racial wealth inequality • Definepartnership strategies to engage organizations of color • LeverageProsperity Now’s brand and community to make the case for investments to close the racial wealth divide • Advancebest practices for bridging the racial wealth divide

11. The Growing Racial Wealth Divide Source: The Ever-Growing Gap, CFED & The Institute for Policy Studies

12. Drivers of the Racial Wealth Divide INCREASED EXPOSURE TO WEALTH-STRIPPING PRODUCTS AND SERVICES LOWER HOMEOWNERSHIP RATES, HOME VALUES; HIGHER % OF INCOME GOING TO RENT LOWER HIGHER EDUCATION ATTAINMENT & WEALTH INSULATION GREATER RATES OF UNEMPLOYMENT LOWER ENTREPRENEURSHIP RATES & BUSINESS VALUES INCOME INEQUALITY & LOWER RETURNS ON INCOME EARNED NON-EXISTENT RETIREMENT SAVINGS LIMITED ABILITY TO WEATHER A FINANCIAL EMERGENCY

13. Drivers of the Racial Wealth Divide Extreme Wealth Inequality is Exacerbating the Racial Wealth Divide

14. Reaching Racial Wealth Equality Source: The Ever-Growing Gap, CFED & The Institute for Policy Studies

15. Public Policy & The Racial Wealth Divide Wealth-Building Policies Have Historically Excluded Households of Color 1790-1960s: The exclusion of communities of color along with many others from immigrating and/or becoming citizens to soothe both the cultural and economic concerns of White Americans. • 1934-1960s: Federally sanctioned housing discrimination through the practice of “redlining”, which shut out households of color from the opportunity to purchase and invest in the largest driver of wealth in this country: a home. • 1935: The exclusion of farmworkers and domestic workers—who were predominately people of color—from coverage under the Social Security Act of 1935. • 1938: The exclusion of a number of tip-based professions predominantly held by Black workers—such as servers, shoe shiners, domestic workers and Pullman porters—from the first minimum-wage protections enacted as part of the Fair Labor Standards Act of 1938. • 1944: Biased distribution of G.I. Bill benefits by officials within the Department of Veterans Affairs, which resulted in an unequal distribution of benefits—such as low-cost home mortgages and tuition assistance—for service members of color.

16. Public Policy & The Racial Wealth Divide The Rising Cost of Unfair Upside-Down Tax Programs While Congress spends more to help the wealthy build more wealth, everybody else gets little or nothing at all.

17. Public Policy & The Racial Wealth Divide The Rising Cost of Unfair Upside-Down Tax Programs

18. Four Flaws that Make Wealth-Building Tax Programs Upside Down Itemized deductions exclude most households from benefits. Most tax programs increase support as a household’s tax rate increases. The larger the asset, the more the support. Timing and structure of benefits prevent many workers from benefiting.

19. Not All Tax Benefits Are Upside-Down The Earned Income Tax Credit (EITC): The Most Effective Anti-Poverty Tool

20. Rainy Day Savings Program

21. Join us as we work to ensure prosperity is in reach for all

22. The Prosperity Now Community The Prosperity Now Community creates connections & inspires action facilitates learning to create and improve programs and policies that foster opportunity, especially for those who have not had it before. Get involved in the Community today! Sign up to stay informed about Prosperity Now and the Community. Sign up today at prosperitynow.org/join.

23. Take action with Prosperity Now Campaigns! Sign up to stay informed about the latest developments and opportunities to take action by joining one of our four federal policy campaigns. TURN IT RIGHT-SIDE UP CONSUMER PROTECTIONS SAFETY NET HOMEOWNERSHIP Homeownership is key to building wealth. Together, we will advocate for products and policies that provide more affordable homes to more people. Consumer protections create fairer, more transparent financial markets. Together, we will ensure consumers keep the safeguards they deserve. Safety net programs help protect vulnerable individuals and families from falling deep into poverty. Together, we will protect programs like SNAP, IDAs and more to help those in need when they need it most. The vast majority of tax incentives go to those at the top, not to those who need it most. Together, we will turn our upside-down tax code right-side up. Visit any of the Campaigns above at https://prosperitynow.org/advocate to learn more and join.

24. Thank you! Jeremie Greer Vice President, Policy & Research Prosperity Now jgreer@prosperitynow.org