Lessons on Tax-Time Savings from the 2013 NCTC National Conference

Last week, the National Community Tax Coalition (NCTC) held its biannual conference featuring experts and practitioners from a variety of fields who shared their insights into the ways taxes affect the lives of low- and middle-income Americans. One of the many themes running through the conference was the attendees’ shared goal of expanding savings at tax time. The Doorways to Dreams Fund (D2D) was well represented at a number of sessions featuring the organization’s signature prize-linked savings program, “SaveYourRefund.” Other sessions emphasized additional incentives-based methods to encourage tax-time savings, most importantly matching funds.

Denise Devaan from the Assets for Independence Resource Center explained how individual development accounts (IDAs; privately managed matched savings programs) could be applied to tax refunds; Jos Linn, a senior associate for U.S. poverty campaigns at RESULTS, and I explained how the Financial Security Credit could incentivize savings through a matching tax refund; and Diane Browning of the Women’s Institute for a Secure Retirement (WISER) suggested how maintaining the capability to purchase U.S. savings bonds at tax time could lead to more opportunities for IDAs and similar programs to match medium-term savings through electronic accounts at the U.S. government bonds clearinghouse called TreasuryDirect.

Incentives-based interventions like these have been shown in numerous studies to significantly increase the saving rate at tax time. But one of the most interesting findings in light of these efforts is the Center for Social Development’s study into purely behavioral methods of increasing the saving rate at tax time. Krista Holub ably represented her coauthors in sharing the results of a recent experiment called “Refund to Savings,” or R2S. The Center for Social Development (CSD) at the Washington University in St. Louis, in collaboration with Duke University and Intuit (the maker of TurboTax), designed a randomized controlled trial to test the effects of behavioral-psychological concepts on savings behavior at tax time. Holub described the program earlier this year as a “savings nudge at tax time” in a blog post on the Ladder with David Rothstein. Their research has the potential to further prove that low- and middle-income Americans can and will save at tax time, as long as the process is made easy and the advantages of doing so are made clear. Stay tuned for a post later this week detailing the findings from Holub’s presentation at the NCTC conference.

Holub’s summary of CSD’s findings from the R2S tax-time savings experiment was only one of the many thought-provoking sessions at the 2013 NCTC conference. Her session clarified my understanding of the savings-at-tax-time issue, and it is hoped that hers and other sessions similarly helped to inform the work of other attendees.

Stay tuned for a post tomorrow on the details of the CSD experiment, as explored in Holub’s presentation last week.

Update: The follow-up post is now available here.