������Ƶ

On Monday we released our paper “,” which included our proposal for a flexible, accessible Financial Security Credit for ordinary families. On Wednesday, sent a “Dear Colleague” letter to the House of Representatives announcing his intention to introduce the Financial Security Credit in legislative form. In the letter, Congressman Serrano said:

Currently, many American households are unprepared to meet short-term and long-term financial needs. More than 43% of American households lack the savings to cover basic living expenses for three months if a layoff or other emergency causes a loss of their current income. Without such a safety net, during financial emergencies many families are forced to rely on suboptimal options such as expensive credit cards and exploitative payday loans that then compound the difficulty of their financial situation, rather than helping solve it.

The Financial Security Credit Act seeks to address these problems by offering an incentive for low- and moderate-income taxpayers to save their tax refunds by making deposits into any of a number of savings options.

Additionally, today’s paper edition of Roll Call includes an published by the Asset Building Program’s Reid Cramer on the failure of personal savings incentives in the tax code. Cramer explains why Senators Max Baucus and Orrin Hatch’s proposal to do away completely with existing saving incentives in their “blank slate” approach to tax reform is actually a step in the right direction for promoting savings.  

The current code gets plenty wrong. Not only does it fail to promote fundamental policy goals, it wastes precious public resources. For example, study after study shows that the 401(k) and the individual retirement account fail to help Americans build savings, even as the cost to the government of offering these tax shelters rises. The Congressional Budget Office has shown that two-thirds of the benefits associated with these tax expenditures gets funneled to the top 20 percent of earners who make the bulk of the contributions to these tax-advantaged accounts but need the least amount of help building up their nest eggs.

Savings is and should be a goal that’s supported by our tax code. It’s a broadly shared American value and a key part of achieving the American Dream. Our system of savings supports does not work for most Americans right now. The Financial Security Credit is the kind of support that Congress should consider when it re-writes the tax code. There’s from New York City’s SaveUSA pilot project showing that this approach can effectively promote savings among very low-income Americans.  Congressman Serrano deserves credit for pushing tax reformers to consider flexible, efficient savings supports that work for ordinary Americans.

Read this on The Ladder summarizing the paper’s findings, the , and the full by following the appropriate hyperlinks. There’s much more to come.