Reps Watson Coleman, Hill and Senators Booker, Young Reintroduce Refund to Rainy Day Savings Act
Today, Congresswoman Bonnie Watson Coleman (NJ-12) and Congressman French Hill (AR-2) announced the reintroduction of bipartisan 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 due to illness can 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 establish a floor beneath which our country doesn’t allow any family to fall. 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.”
“Before COVID-19, Americans had a savings crisis, and it has only gotten worse” said Hill. “To change the culture of saving money in states like Arkansas, innovative opportunities like making it easier for Americans to build up savings for unexpected expenses are needed. The Refund to Rainy Day Savings Act is an inexpensive and strong bipartisan proposal that can put low-income earners who may have never saved money before on the path to financial stability. Giving American and Arkansan hardworking families the ability to save will unleash more economic prosperity.”
A companion bill is being introduced by Senator Cory Booker of New Jersey and Senator Todd Young of Indiana.
“Across our country, millions of Americans are living paycheck to paycheck, a reality that has been exacerbated by the devastating economic impact of the COVID-19 pandemic,” said Senator Booker. “We watched over the last year as many families teetered on the edge of crisis, as paychecks stopped virtually overnight and more than half of Americans lacked the savings to pay for the next month’s rent, electricity bill, or groceries to put food on the table. We need to take steps to address this savings crisis, and by allowing tax filers to forgo a portion of their tax refunds until later in the year, we can encourage families to build the savings they need when faced with emergency or unexpected costs that arise.”
“This past year has underscored the need for Americans to have access to emergency savings for sudden, unexpected expenses. The Refund to Rainy Day Savings Act is a common-sense way to encourage workers to set aside part of their tax refund so that they are prepared if a crisis arises,” said Senator Young.
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.
In 2018, 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 of New Jersey, and Todd Young of Indiana, would strengthen the financial foundation of these families.
The Refund to Rainy Day Savings Act is endorsed by: Prosperity Now, NETWORK Lobby for Catholic Social Justice, National CAPACD, Local Initiatives Support Corporation (LISC), RESULTS, SaverLife, The Middleburg Institute, Change Machine, National Urban League, Commonwealth PolicyLink, Aspen, National Alliance of Community Economic Development Associations (NACEDA), and BPC Action.
To see the text of the bill, click here.