Serrano Introduces Bill To Encourage Savings

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States News Service (CFED)
By: States News Service
August 1, 2013

The following information was released by the office of New York Rep. Jos E Serrano:

Congressman Jose E. Serrano today introduced the "Financial Security Credit Act of 2013," a bill to encourage a higher household savings rate nationwide by incentivizing savings by low- and moderate-income earners at tax time.

"We know that many American households are unprepared to meet short-term and long-term financial needs, and many more feel as though they cannot save for their long term goals," said Congressman Serrano. "This legislation will address these problems by offering an incentive for taxpayers from low- and moderate- income brackets to save their tax refunds by making deposits into any of a number of savings options. If the taxpayer contributes to an eligible savings product and maintains the savings for eight months, they will become eligible for a refundable tax credit of up to $500 directly deposited into their account. It has been proven to work in New York City, and I know that it can work nationally."

"The Financial Security Credit Act offers a proven approach to supporting the economic stability of Americans by providing meaningful and accessible onramps to building savings and I commend Congressman Serrano for introducing this important legislation," said New York City Department of Consumer Affairs Commissioner Jonathan Mintz. "New York City's SaveUSA tax time savings program demonstrated that New Yorkers with very low incomes can and will save when given the right opportunities. The Financial Security Credit will encourage savings that will help millions of Americans make meaningful progress towards improving their financial stability in the short term, and therefore starting on the path toward building longer-term savings, which are critical to stability."

"The tax code should promote savings, opportunity and mobility," said Reid Cramer, director of the Asset Building Program at the New America Foundation. "Currently the federal government spends almost $150 billion each year supporting the savings of upper-income Americans and almost nothing on the savings of low- and moderate-income families. We need policies that close the opportunity gap, not make it wider. The Financial Security Credit would help to level the playing field and give all American workers a chance to save and build financial security. The bill expands upon a proven approach that works for ordinary, hard-working families. Representative Serrano deserves credit for promoting legislation that supports savings, responsible financial behavior and greater economic opportunity."

Bob Friedman, Founder and Chairman of the Board of the Corporation for Enterprise Development (CFED), spoke out in the favor of the legislation as well. "Economic mobility is the abiding ethic of this country, but income alone is not enough to progress in the American economy," Friedman said. "Income helps working families get by; saving helps them get ahead. While the tax code has long supported saving for the highest-income workers, Representative Serrano's legislation will bring support to both middleclass families and those struggling to secure a foothold in the middleclass."

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 income. Without such a safety net, during financial emergencies many families are forced to rely on bad options such as expensive credit cards and exploitative payday loans.

Under the legislation, if an individual is unbanked or does not have an eligible savings option, then they are provided with the opportunity to establish an account on their tax form. Individuals can contribute to any of a number of savings options, including: basic savings accounts, 529 College Savings Accounts, Coverdell Education Savings Accounts, qualified retirement plans like 401(k) and IRAs, certificates of deposit, and savings bonds.

This legislation builds on the successfuName

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This page contains a single entry by CFED published on August 2, 2013 4:11 PM.

Working-Class Whites Are Gloomy About Future Amid Rising Income Gaps, Racial Shifts was the previous entry in this blog.

Income Gap Is What's Tearing Cities Like Detroit Apart is the next entry in this blog.

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