RELEASE: Financial Empowerment Helps Low-Income Families Keep More of What They Earn
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By Desmond Brown | March 5, 2012
Washington, D.C. — While millions of low-income families look forward to tax filing season and the income boost the earned income tax credit (EITC) provides, many are not getting the full benefits of the credit because they turn to expensive tax preparation vendors to file their taxes. During tax filing season these vendors bombard low-income communities with a host of advertisements. They market their services as effective tools to help low-income consumers get their refund faster to make purchases, pay off bills, and avoid the traps of credit cards. Of course what’s missing from this marketing are the hidden fees and high interest families pay to get their tax refund a few days early.
Since the EITC is one of the largest single cash payments most low-income workers will receive in a given year, it presents the best opportunity for antipoverty advocates to engage families in financial empowerment planning. A major obstacle to low-income families gaining more stable financial footing is that many of these families don’t have checking or saving accounts leaving them prey to predatory lenders. The unbanked level jumps to 22 percent for African Americans and 19 percent for Hispanics. Many of these families have lower incomes, yet pay higher fees to cash checks and pay for typical bills.
To help more working families keep what they earn, antipoverty activists are embracing financial empowerment efforts and pushing for new policies to restrict asset-stripping practices. CAP’s Half in Ten campaign outlined a set of policies in its recent report, “Restoring Shared Prosperity,”to help cut poverty and expand economic growth.
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To contact experts on this topic, please contact Laura Pereyra at lpereyra@americanprogress or 202.741.6258.