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New Congressional Bills Champion Economic Self-Sufficiency for Low-Income Populations

September 30, 2013

With the latest U.S. Census data showing the number of Americans living in poverty on the rise and asset inequality growing, a number of new bills introduced on Capitol Hill seek to champion economic self-sufficiency for low- and moderate-income individuals and families. Legislative proposals currently under consideration in the House and Senate seek to expand availability of Volunteer Income Tax Assistance (VITA), modify eligibility and the amount of the Earned Income Tax Credit (EITC) and establish a matched savings option as a new tax benefit. These bills would help the nearly 1 in 3 people with disabilities living in poverty, among the highest poverty rate of any underserved population in America.

The Volunteer Income Tax Assistance Act (S. 1368), introduced on July 25, 2013, by Senators Sherrod Brown (D-Ohio), Tom Udall (D-NM), Jay Rockefeller (D-WV), and Bob Menendez (D-NJ), seeks to expand funding to $30 million annually for the VITA grant program to provide matching funds to develop and expand qualified tax-return preparation programs assisting low-income tax payers and members of underserved populations, including people with disabilities. The grants would be awarded on a competitive basis and must demonstrate low-income taxpayer outreach and education around available income supports and refundable credits such as the Earned Income Tax Credit (EITC), a federal tax credit for low- and moderate-income workers that helps reduce poverty by supplementing earnings. The VITA Act would also establish a National Center to Promote Quality, Excellence and Evaluation in Volunteer Income Tax Assistance. The Center would support outreach and training to replicate best practices from VITA sites and expand marketing efforts nationwide to raise awareness and encourage use of VITA as a free service among low- to moderate-income populations, with special attention to underserved populations including individuals with disabilities. During 2012, VITA programs filed 1.6 federal income tax returns and helped low-income taxpayers claim $2.2 billion in tax refunds. However, one in five taxpayers who were eligible to claim the EITC failed to do so. 

The Working Families Tax Relief Act (S. 836), introduced on April 25, 2013, by Senator Sherrod Brown (D-Ohio) and cosponsored by 29 other Senators, seeks to expand coverage of the Earned Income Tax Credit. A companion House Bill (H.R. 2116) was introduced by Representative Richard Neal (D-MA) and cosponsored by 40 other House members.  Both bills would expand coverage of EITC to low-income individuals without qualifying children who are at least 21 years old and not full-time students.  Current law limits eligibility for EITC to individuals 25 years old and older. The legislation would also expand the amount of the refund for eligible individuals and families.

On August 1, 2013, Representative José Serrano (D-NY) introduced the Financial Security Credit Act of 2013 (H.R. 2917) to offer low- and moderate-income earners new incentives to save at tax time. The bill provides eligible individuals and families an opportunity to save their tax refunds by making deposits into any of a number of savings options. An individual or family will be eligible for a refundable tax credit of up to $500 if the savings is maintained for eight months, with the credit being deposited directly into their account. Qualified savings accounts would include 529 college-savings accounts, qualified retirement accounts such as 401(k) and IRAs, as well as certificates of deposit and savings bonds.  The proposal builds on the successful SaveUSA program model, which was initiated in New York City and has been replicated in other cities nationwide. The match offered is a further incentive to low-income individuals and families to focus on longer-term economic stability and security.

The LEAD Center and National Disability Institute urge the disability community to become informed about these proposals and be a part of the tax reform debate.