The Asset Building News Week is a weekly Friday feature from New America's Asset Building Program. Asset Building News Week is designed to help readers keep up with news and developments in the asset building field. This week's topics include taxes, wealth building, the racial wealth gap, child savings accounts and retirement savings.
Taxes and Wealth Building
The New York Times ran a feature story this week on the “upside down” nature of the wealth building portions of our tax code, featuring new research from CFED’s Ezra Levin. Patricia Cohen writes,
“The amount of spending in those areas channeled through taxes is on the rise, topping $620 billion in 2014, up from $540 billion in 2013, according to Mr. Levin’s analysis. By comparison, federal discretionary spending by 14 of the 15 cabinet agencies, including housing, transportation, labor, commerce, education, Treasury and health and human services totaled $464 billion.”
That spending overwhelmingly benefits wealthier families,
“Those at the tippy-top of the income scale — the top 0.1 percent, with an average annual income of $7.6 million — received an average of $33,391 in federal tax payouts analyzed by the group. Those in the bottom 60 percent, who earn less than $65,000, got less than $1,000 on average, altogether about 12 percent of the billions handed out.”
Anti-tax advocates called the analysis, “stupid and dishonest.” Read the piece and judge for yourself.
Wealth Building and the Racial Wealth Gap
Erin Currier and Sarah Sattelmeyer from Pew wrote about the “give and take” nature of public policy in TalkPoverty.org this week. In an article titled, “Is the American Dream Shifting?” Currier and Sattelmeyer discussed new survey data that showed changing perceptions of what success means for Americans, “The American Dream is becoming less about mobility and more about keeping one’s head above water.” The authors point out that policymakers must consider not just that access to savings programs can boost wealth, but that policies like asset limits can hinder wealth development for striving families.
A report from NBC’s Seth Freed Wessler cites forthcoming work by Professors Darrick Hamilton, Sandy Darity, and Rebecca Tippett that shows that “gaps in wealth, not in education, between black and white families may be the most powerful force locking Americans into their social class.” These findings call for a significant change in the way that public policy treats wealth building and education policy. As Hamilton says in the article, "We tend to think that if you get a good education, you've got it made, but to make it with some security, you first need wealth."
Is action on the racial wealth gap forthcoming? On Wednesday Representative Maxine Waters introduced a Congressional Resolution to recognize the Racial Wealth Gap and call for action to close it. You can watch the Congresswoman’s speech introducing the measure on C-SPAN.
Last week we highlighted First Focus’ 2015 installment of its Big Ideas book, collecting essays from experts in various fields on policy ideas to improve the lives of children. The book this year features three different essays all of which promote the idea of child savings accounts. This week we saw more evidence of the growing political appeal of child savings accounts. In the Western News, Jim Stipcich writes in support of a Montana bill to offer child savings accounts to parents who check a box while filling out the birth certificate paperwork for their newborns, as is current policy in Rhode Island. In Vermont, legislation was introduced to create a universal, progressive system of college savings accounts. The bill, H. 448, was introduced by lead sponsor Jill Krowinski.
The Doorways to Dreams (D2D) Fund shared new survey data on the attitude of Americans toward savings initiatives like President Obama’s myRA plan. Echoing the survey results shared by Pew, the data shows that many Americans are interested in myRA as an emergency savings vehicle, not just a retirement savings plan. Since myRA (and other Roth-IRA based savings initiatives like Illinois’ Secure Choice plan) is designed to allow access to funds for emergency use, this alignment with consumer interest is a good thing, argue Joanna Smith-Ramani and Tatiana Brezina,
“A retirement account like myRA can encourage Americans to be aspirational long-term savers while still giving them the flexibility to use their savings for short-term needs. It offers a simple, streamlined option for consumers who may not want to manage more than one savings account.”
Michal Grinstein-Weiss of the Center for Social Development testified before the Senate Aging Committee last week and told policymakers to consider four keys to building retirement savings:
Make saving money as automatic as possible.
Leverage “golden moments” for saving.
Build unrestricted emergency savings.
Facilitate savings opportunities early in life.
New America will host an event on Illinois Secure Choice and the growing movement for states to provide automatic, near-universal retirement savings plans. The event will feature the lead sponsor of the authorizing law in Illinois, State Senator Daniel Biss. The event will be held April 1st at New America.
Can big data lead to big improvements for financially vulnerable households? The Center for Financial Services Innovation (CFSI) examined that question this week in their new report, “Big Data, Big Potential.”
April 15th is fast approaching, and the CFPB has advice on how to choose a tax preparer and how to make the most of your tax refund.
Sheryl Harris of the Cleveland Plain Dealer covers warnings from the National Consumer Law Center and the Consumer Federation of America about how fees from unregulated tax preparers can “gobble up” your tax refund.
In The Atlantic, Sean McElwee tells the “Odd Couple” story of “a conservative pastor and an openly gay former Obama campaign staffer” coming together to battle payday lending in South Dakota.