Asset Building
Summary
A complication to the ability to build assets is the large number of low-income residents with limited access to mainstream financial institutions. While difficult to measure, national research indicates 30 percent of households making less than $25,000 a year have no checking or savings account. They are un-banked. For these people, up to 2 percent of their
annual income is spent on simply cashing checks and purchasing money orders. These individuals are also far more vulnerable to exploitive pay-day lending and refund anticipation loan schemes.
A new focus for the Asset Building Team is the creation of a Banking Task Force which has 12 banks working together on strategies to bank the unbanked.
Savannah was fortunate in 2006 to have been selected by the National League of Cities’ Institute For Youth, Education, And Families as one of seven cities to participate in a technical assistant grant for Asset Building (Sponsored by the Annie E. Casey Foundation). As a result, several of the team members have participated in site visits to various cities across the country where city governments are highlighting their Asset Building strategies.
Policy Agenda
- Procure state level assistance for Earned Income Tax Credit (EITC)*
Key Results
- $1.2 million in EITC received (average credit of $782 per tax filer). This was a 300 percent increase over 2004.
- $100,000 in resources donated by the United Way of the Coastal Empire, expanded the number of IDAs Individual Development Accounts. By the end of 2005, 9 individuals achieved homeownership via the IDA program.
- By 2007, 2,574 returns were filed at 12 Volunteer Income Tax Assistance sites, representing $2,614.082 in federal refunds returned to the community.
2006 Results
- Nine volunteer income tax assistance sites set up
- 50-75 volunteers trained in EITC to work with individuals
- 1,738 returns filed representing an estimated $2.2 million in refunds
- The City of Savannah leveraged an estimated $105,000 for EITC expansion
2007
- Set up 12 volunteer income tax assistance sites
- With the help of 75 volunteers, assist with filling out 2,574 filings
- Estimate $1,228,123 million returned in EITC; $2.6 million in federal refunds
- The VITA sites in 2007: Chatham County, Economic Opportunity Authority, JC Vision, Neighborhood Improvement Association, Savannah Entrepreneurial Center, Second Arnold Baptist Church, St. Benedict the Moor, St. Joseph’s Hospital, St. Mary’s Community Center, Union Mission, United Way/Effingham County and the Pembroke Library.
About the Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a federal tax credit available to low income taxpayers. The EITC provides moderate and lower-income working families and individuals with tax relief that brings significant dollars back into their households. The EITC can provide a cash refund even to families whose incomes are so low that they are not required to file a tax return.
- For earnings from 2007 the EITC can provide as much as $3,000-$4,000 per year to working families with incomes up to $37,783. The average refund in Savannah in 2000 was $1,576.
- In Savannah, thousands of families fail to claim the Earned Income Tax Credit, which could bring about $12 million in tax credits back into the local economy.
- Eligible workers often are not claiming the credit - either because they haven’t heard about it, don’t know they are eligible or don’t know how to apply. Many EITC eligible workers who earn very low amounts of income are not required to file a federal tax return. If these workers don’t file a federal tax return, they can’t make a claim for EITC. Step Up tries to reach these workers and to provide access to free tax preparation services.
- EITC refunds are often used to build long-term assets for families. Reported uses for refunds have included payment of debt, rent and utility bills, opening checking or savings accounts, and use for transportation or housing costs.
Contacts
ChampionEdward Chisolm
Neighborhood Improvement Association
912-308-1365
echisolm@niacdc.org
Neighborhood Improvement Association
912-308-1365
echisolm@niacdc.org