Washington, D.C— The Asset Building Program at New America applauds the “Financial Security Credit Act of 2015,” introduced today in the House of Representatives by Congressman Jose Serrano (D-NY). The proposed legislation would incentivize savings by low- and moderate-income earners at tax time and promote greater financial security. The bill is based on a 2008 policy proposal developed and championed by the Asset Building Program.
“Living paycheck to paycheck, without meaningful savings, is essentially the ‘new normal’ for most Americans,” said Reid Cramer, director of the Asset Building Program. “Our current approach of heavily subsidizing retirement savings for upper income Americans and ignoring other Americans and other needs is obviously not working. The Financial Security Credit would give striving families the option to build a personal savings firewall, invest in educational opportunity for their children, or save for retirement.”
The proposed bill offers taxpayers in low- and moderate-income brackets an incentive to save their tax refunds in one of a number of savings options. The incentive is up to $500 in a refundable tax credit deposited directly into the account of their choice—such as retirement, education, or emergency savings accounts.
“We should trust ordinary, hard-working families to make the best choice for themselves,” Mr. Cramer continued. “Representative Serrano deserves credit for promoting legislation that supports savings, responsible financial behavior, and greater economic opportunity.”
According to research from the Pew Charitable Trusts, one in three households has no savings at all. Additionally, nearly half of all households don’t have sufficient savings to support themselves at the poverty level for just three months if they were to lose their source of income, according to the Corporation for Enterprise Development.
“Study after study shows us that Americans up and down the income ladder don't have enough flexible savings,” said Justin King, policy director of the Asset Building Program. “This means they're at risk when their car breaks down or someone gets sick, but it also means they can't effectively save for their retirement, for their first house, or for their daughter's college education.”
“This policy will support the real needs of real families, and help them get to a place where they can make big investments in their kids, their homes, their communities, and their own retirement.”