Imagine if the Earned Income Tax Credit was significantly downsized or even eliminated. Someone earning $20,000 a year to support their family of four will struggle to get by.
Imagine if people who turn to a payday loan to weather a financial emergency weren’t paying on average 293% interest. They wouldn’t be forced into a debt cycle and worse-off than before.
Imagine if someone with a blemished banking history and low credit had a path to improve their financial situation. They’d be able to access an affordable loan to go to college or start their own business.
In these times when the wealth opportunity gap continues to deepen and one in three Americans has nothing saved—80% of Prepare + Prosper’s (P+P’s) customers report having less than $500 in savings—the evidence could not be more stark: We must use our ground game expertise as tax and financial health experts to inform policy, market practices, and funding allocations.
There’s a saying that goes: if you’re not at the table, you’re on the menu.
We believe that too many of our low-income customers are too often on the menu. This is why Prepare + Prosper spells out a commitment in its strategic plan to:
“Advocate with and on behalf of low- and moderate-income people to influence and strengthen policy in the areas of tax policy, asset building, and consumer protection.”
The language here is intentional. We do not simply advocate for our customers, and we have very specific areas of focus where we bring expertise and value. One key element of our value is our reach, relationships, and engagement with our customers and volunteers – our ability to bring their voices and experiences to policy change efforts
This year, Prepare + Prosper is working on three legislative priorities at the state level:
- In collaboration with the Minnesota Budget Project, we are working to expand the Minnesota Working Family Credit – both the amount for current recipients and making eligible younger taxpayers and those who do not claim dependents. We have and will continue to provide expert testimony during committee hearings, and we work with customers and volunteers to testify their support as well.
- Working with the Minnesota Asset Building Coalition (which we were a part of launching several years ago), we are supporting legislation to expand free tax programs throughout Minnesota and create a new funding stream for integrating financial capability services at tax time. We provided guidance around the legislative content and will provide testimony as well.
- Working to secure funding to expand P+P’s FAIR initiative (Financial Access in Reach). FAIR bridges a market gap through a set of financial products that move people out of the expensive financial market place (e.g. check cashers, payday lenders) and into the financial mainstream where they have access to products and services to grow their net assets. The FAIR Financial Solution includes checking, savings, and credit building products, and will be distributed through trusted sources like nonprofits, employers, public systems, and faith-based institutions.
It’s important to note that P+P worked on the first two bulleted efforts in 2016, and while both bills made it into the final tax bill, it never became law because of some errors in the bill that were never addressed in a special session.
What’s next in this work?
Federally, P+P is working with national and local partners (Greater Twin Cities United Way, MN Budget Project, and Minnesota Asset Building Coalition) to prepare for tax reform and develop messages and strategies to protect and ideally expand the EITC and other refundable tax credits. P+P will focus on mobilizing constituents and educating members of Congress, and will support our colleagues in developing strategies throughout the free tax prep network.
If you’re interested in learning more or getting involved in this work, you can reach me at tracy@prepareandprosper.org or 651-262-2155.
