Representatives Watson Coleman and French Hill Propose Federal Savings Accounts for Taxpayers

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Washington, April 4, 2019 | comments

Today, Congresswoman Bonnie Watson Coleman (D-NJ) and Congressman French Hill (R-AR) announced the introduction of legislation that would allow taxpayers the option to defer a portion of their taxes into an account that earns interest for six months. The bill, The Refund to Rainy Day Savings Act, seeks to give more families the flexibility to handle minor emergencies.

 

“For too many families, a blown tire, a burst pipe, or even a few days off with the flu result in hard financial decisions — whether to risk your credit score by skipping a payment, miss the month’s rent or mortgage payments, or even pass on needed healthcare,” said Watson Coleman. “Since my first term, I have worked to get more families out of this hole, and the Refund to Rainy Day Savings Act would do just that. Working Americans are living on the brink. We have to find solutions that will give them a stronger financial footing.”

 

“We have a savings crisis in America,” said Hill. “In order to change the culture of saving money in states like Arkansas, innovative opportunities are needed to make it easier for Americans to build up savings for unexpected expenses. The Refund to Rainy Day Savings Act is a unique and inexpensive solution that can put low-income earners, who may have never saved money before, on the path to financial stability. Giving hardworking families the option to save will unleash more economic prosperity.”

 

The Refund to Rainy Day Savings Act would allow tax filers receiving a refund via direct deposit to defer up to 20 percent of their refund to a Treasury-held account to accumulate interest. After six months, the refund, plus interest earned, would be transferred to the direct deposit account, encouraging more people to set aside emergency savings.

 

The bill also creates a pilot program to evaluate matches for low-income tax filers, redeploying the existing Assets for Independence match program with expanded flexibility to allow localities to identify best practices without increasing federal funding.

 

Last year, the federal Economic Well-Being of U.S. Households report found that 40 percent of Americans couldn’t cover an unexpected expense greater than $400 — an improvement on the same statistic from 2013. The Refund to Rainy Day Savings Act, a companion to legislation introduced by Senators Cory Booker (D-NJ), Doug Jones (D-AL), Tom Cotton (R-AR) and Todd Young (R-IN), would strengthen the financial foundation of these families.

 

To see the text of the bill, click here.

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