Thelma Small, 82 years old, from Jacksonville

Thelma attended this year’s Super Saturday event held March 2 at the Gateway WorkSource location. One of Thelma’s daughters has been using Real$ense for several years. She’s the one who encouraged her mother and sister to this year’s event. Real$ense has really turned into a family affair for Thelma and her daughters.

Thelma got her taxes prepared by a trained Real$ense volunteer, attended a financial education workshop at the event and also accessed her credit report. All of the services were free. She arrived at Super Saturday around 10 a.m. and was filed and done before 1 p.m.

“Rosalind Brown helped me,” said Small. “I would definitely come back to Real$ense, it’s a great service. I got lots of great information and my taxes are done!”

Super Saturday is an annual event held at the Gateway WorkSource. The next all day event, Tax Blitz Day, will be held at the center on tax deadline day, April 15, 2013 from 6 a.m. to 6 p.m.

Between now and Tax Blitz day, you can access tax preparation services at any of the more than 60 locations of Real$ense in the region, a full listing is available at http://www.realsensejax.org/filing-options/tax-sites/#.UT9dDVdNXcw.

Online Jobs Platform to Help Houstonians Find Work

Tweet My Jobs, Houston is a new citywide online jobs platform to help Houstonians find work using innovative technology to combine the popularity of social media and the convenience of a smart phone application. This free service, announced in the mayor's State of the City, already has more than 150,000 Houston job postings from entry level to senior level corporate positions.

Tweet My Jobs, Houston is available at www.houston.tweetmyjobs.com or in the application store for your mobile device. Just push a button to find jobs or to post a job listing to every corner of the digital landscape. The unique integration with Twitter and Facebook allows job seekers to receive job notifications via text message, email or through social media. It's also possible to see if Facebook friends are connected with the hiring company.

The online platform will allow the city to track the number of residents pursuing job opportunities, the type of positions being sought, the level of position and the industries in which job seekers want to work. It will also be able to show the number of jobs employers are posting over time as well as the type, industry and location of available opportunities. Tweet My Jobs, Houston is being funded through a $350,000 grant from the Houston Housing Finance Corporation. It will be administered by the City's Office of Business Opportunity (OBO.) For more information about OBO and its suite of services, visit www.houstontx.gov/obo or call 832.393.0954.

Education can only be the Great Equalizer when access to it is universal. In an era of already high and continually rising tuition prices, student loans provide access to higher education for not just low-income, but increasingly middle- and upper-income families. Higher Education is directly correlated with higher pay, better quality of life, and just about every measurement you can dream up. Yet, our student loan system is wrought with deep problems:

• National student loan debt topped $1 Trillion this year

• Tuition costs continue to outstrip inflation

• For-Profit online universities’ continue to increase in presence

• Students are strapped with a lifelong debt burden

• Student loan debt is difficult to refinance

Tackling all of these problems will take concerted effort at the national level and a fundamental rethinking of our higher education system. The starting place for that movement is July 1st, 2013. On that day, if Congress does nothing, the interest rate on Stafford student loans will double from the current 3.4% to 6.8%. According to the United States Public Interest Research Group, each full Stafford loan borrower will see an increase of $1,000 in interest costs.

National Student Loan debt increased 373% from $260 billion in 2004 to $970 billion by the end of 2012, and has surpassed $1 trillion by most estimates already in 2013. Stacked against the total $1 trillion number, the increase cost of $1,000 may not seem so terrible. Yet student loan debt is permanent debt which cannot be erased through bankruptcy. Students unable to meet their interest payments fall into a default cycle that savages their credit rating. The default rate for those under the age of 20 is 35%, almost double the 18% or so for those over 50 years old. Should the Stafford loan interest rate double, the already enormous 35% delinquency rate will surely rise. Lowering the delinquency rate on student loans will save millions of families and individuals unnecessary economic hardship. A lower debt burden will also increase the lifetime economic output of an entire generation.

Today, April 25th, the United States Students Association and House Representatives Karen Bass of California and Joe Courtney of Connecticut held the first anniversary of the Student Debt reaching $1 trillion in Washington, D.C.. Instead of kicking the can down the road another year like Congress did July 1st of 2012, join them by lending your support for bill HR1330 to allow students to borrow at lower rates and payback their loans easier and safer.

Yesterday, the Consumer Financial Protection Bureau released a new white paper examining payday and deposit advance loans. The paper found that most borrowers are not using payday loans for short-term needs (as the payday industry often claims), but instead are repeatedly rolling over loans and taking out additional loans. As a result, borrowers often become stuck in an expensive and financially disastrous cycle of debt. The CFPB found that nearly half of payday borrowers have more than 10 loans a year, while 14 percent undertook 20 or more transactions annually.

This study is more comprehensive than almost any other study ever conducted, since the CFPB was able to acquire data on millions of borrowers directly from banks and small dollar lenders.

In a press release, CFPB Directory Richard Cordray explained: “This comprehensive study shows that payday and deposit advance loans put many consumers at risk of turning what is supposed to be a short-term, emergency loan into a long-term, expensive debt burden. For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates.”

The paper indicates that the Bureau is very concerned with current industry practices. The Bureau plans to conduct additional research and analysis, looking at online payday lending, the effectiveness of state restrictions on payday lending, and consumers’ motivations for borrowing. The report concludes that consumers need additional protections in this market and that the Bureau intends to use its authority to implement new protections once its research is complete. Even though, by law, the CFPB cannot set rate interest rate caps (the gold standard policy), there is much the Bureau still can do to protect consumers.

The Bureau’s interest in investigating payday borrowers’ experiences provides an important opportunity for asset builders to bring attention to the financial instability that results when predatory loans lead consumers into cycles of debt. This opportunity comes as asset-building advocates have worked for years to implement better consumer protections at the state and local levels. In fact, Twenty-five states currently have pending legislation addressing predatory small dollar lending. And the Assets & Opportunity Network recently released a 2013 Network Federal Policy Agenda, outlining the key policy issues that are most important to Network members. The number one issue on the agenda is educating the CFPB on predatory small dollar lending and other consumer issues. A few weeks ago, Network members weighed in with their recommendations on how the CFPB could curb predatory lending, which will become the basis for a statement and comments to the CFPB in the coming weeks.

Click here to read the full CFPB paper. Other key findings from the report are below.

Key Findings: Payday and Deposit Advance Loans Can Become Debt Traps for Consumers

The report found many consumers repeatedly roll over their payday and deposit advance loans or take out additional loans; often a short time after the previous one was repaid. This means that a sizable share of consumers end up in cycles of repeated borrowing and incur significant costs over time. The study also confirmed that these loans are quite expensive and not suitable for sustained use. Specifically, the study found limited underwriting and the single payment structure of the loans may contribute to trapping consumers in debt.

Loose Lending: Lenders often do not take a borrower’s ability to repay into consideration when making a loan. Instead, they may rely on ensuring they are one of the first in line to be repaid from a borrower’s income. For the consumer, this means there may not be sufficient funds after paying off the loan for expenses such as for their rent or groceries – leading them to return to the bank or payday lender for more money.

• Payday: Eligibility to qualify for a payday loan usually requires proper identification, proof of income, and a personal checking account. No collateral is held for the loan, although the borrower does provide the lender with a personal check or authorization to debit her checking account for repayment. Credit score and financial obligations are generally not taken in to account.

• Deposit Advance: Depository institutions have various eligibility rules for their customers, who generally already have checking accounts with them. The borrower authorizes the bank to claim repayment as soon as the next qualifying electronic deposit is received. Typically, though, a customer’s ability to repay the loan outside of other debts and ordinary living expenses is not taken into account.

Risky Loan Structures: The risk posed by the loose underwriting is compounded by some of the features of payday and deposit advance loans, particularly the rapid repayment structure. Paying back a lump sum when a consumer’s next paycheck or other deposit arrives can be difficult for an already cash-strapped consumer, leading them to take out another loan.

• Payday: Payday loans typically must be repaid in full when the borrower’s next paycheck or other income is due. The report finds the median loan term to be just 14 days.

• Deposit Advance: There is not a fixed due date with a deposit advance. Instead, the bank will repay itself from the next qualifying electronic deposit into the borrower’s account. The report finds that deposit advance “episodes,” which may include multiple advances, have a median duration of 12 days.

High Costs: Both payday loans and deposit advances are designed for short-term use and can have very high costs. These high costs can add up – on top of the already existing loans that a consumer is taking on.

• Payday: Fees for storefront payday loans generally range from $10-$20 per $100 borrowed. For the typical loan of $350, for example, the median $15 fee per $100 would mean that the borrower must come up with more than $400 in just two weeks. A loan outstanding for two weeks with a $15 fee per $100 has an Annual Percentage Rate (APR) of 391 percent.

• Deposit Advance: Fees generally are about $10 per $100 borrowed. For a deposit advance with a $10 fee per $100 borrowed on a 12-day loan, for example, the APR would be 304 percent.

Sustained Use: The loose underwriting, the rapid repayment requirement, and the high costs all may contribute to turning a short-term loan into a very expensive, long-term loan. For consumers, it is unclear whether they fully appreciate the risk that they may end up using these products much longer than the original term. Or, that they may end up paying fees that equal or exceed the amount they borrowed, leading them into a revolving door of debt.

• Payday: For payday borrowers, nearly half have more than 10 transactions a year, while 14 percent undertook 20 or more transactions annually. Payday borrowers are indebted a median of 55 percent (or 199 days) of the year. For the majority of payday borrowers, new loans are most frequently taken on the same day a previous loan is closed, or shortly thereafter.

• Deposit Advance: More than half of all users borrow more than $3,000 per year while 14 percent borrow more than $9,000 per year. These borrowers typically have an outstanding balance at least 9 months of the year and typically are indebted more than 40 percent of the year. And while these products are sometimes described as a way to avoid the high cost of overdraft fees, 65 percent of deposit advance users incur such fees. The heaviest deposit advance borrowers accrue the most overdraft fees.

Mississippi’s tax system as a whole, including income taxes, sales and use taxes, and local property taxes requires low income families to pay a larger portion of their income in taxes than higher income earners.

As shown in the chart below, we ask low income families to pay over 10 cents out of every dollar they earn in state and local taxes, while the wealthiest households pay just 6.5 cents out of every dollar of income. For low income families, that 10 cents means they have less to spend on necessities.

Source: MEPC analysis of data from Institute on Taxation and Economic Policy

The tax system asks more of low income families due to its heavy reliance on the sales tax. The sales tax is levied without taking into account a family’s ability to pay. Furthermore, lower income families spend a larger portion of their income on goods that are subject to the sales tax, especially because we are one of only two states to extend our full sales tax includes groceries.

Even when we look at lower income families as a group, they pay more of Mississippi’s taxes than those with higher incomes. The chart below shows the share of income earned and taxes paid by those who earn more than $70,000 and less than $70,000. The 80% of families in Mississippi earning under $70,000 in income have less than half of the income in Mississippi as a group, yet pay more than half of state and local taxes.

Source: MEPC analysis of data from Institute on Taxation and Economic Policy

To lessen the burden on low income families, the state should reduce or eliminate the sales tax on groceries and balance that by make the income tax more progressive. Ways to make the income tax more progressive would be to add a higher income tax bracket and to enact a refundable State Earned Income Tax Credit.

Income inequality hurts us all. Our state tax system shouldn’t make this worse—especially when we have the ability to adjust our tax system to reflect the realities of working families in our state.

You can read more about how Mississippi’s tax system affects low income families in MEPC’s publication, “The Nuts and Bolts of the Mississippi Budget: A Taxpayer’s guide to the Mississippi Budget,” found here.

To learn more about the state and local taxes paid in Mississippi and throughout the nation, refer to this fact sheet from the Institute on Taxation and Economic Policy.

Author: Francinia McKeithan Henry, Policy Analyst/ SFAI Policy Fellow and Sara Miller, Senior Policy Analyst

This blog was originally posted on the COFI website.

This month in the Illinois legislature, Community Organizing and Family Issues (COFI) POWER-PAC parent leaders are supporting House Bill 2262 (and partner Senate Bill 2319) to make it easier for low-income families to save money. COFI is a Chicago-based grassroots community organization composed of parents focused on the well being of children, youth and families. COFI POWER-PAC partners in this effort to eliminate the TANF Asset Limit Test with the Illinois Asset Building Group (IABG) and as part of POWER-PAC’s Stepping Out of Poverty campaign.

Currently in Illinois, persons applying for the public benefits program Temporary Aid to Needy Families (TANF) aren’t allowed to have more than $2,000 in savings. POWER-PAC parents are meeting with state legislators, asking them to support the elimination of asset limits so that families can save and still receive help in difficult financial times.

As POWER-PAC leader Lisa Russell from the North Lawndale community explained: “There are just too many hoops for parents to have to jump through to access needed benefits for the children and families. Eliminating the asset limit on TANF will help families be able to save and uplift themselves.”

After meeting two weeks ago with Lisa and other POWER-PAC parent leaders, Representative Art Turner Jr. agreed to co-sponsor the bill!

In addition to changing policies that make it hard for low-income families to build assets, parents are also educating themselves about ways in which they can better manage their finances, get out of debt, and build their savings. POWER-PAC, the Dvorak, Nixon, and Penn Elementary School Parent Teams, Family Focus – Lawndale, Nuestra Familia, and The Resurrection Project have partnered to host financial literacy classes for low-income parents. The first round of trainings, in the Hermosa community, were held in March and had 36 parents participate. The trainings in North Lawndale start in April.

House Bill 2262 and Senate Bill 2319 are gaining momentum as more legislators, individuals, and organizations recognize the importance of this policy. Please email Lucy Mullany, IABG Coordinator, if you are interested in signing on in support.

As tax day approaches, our thoughts often turn to the personal income tax. While this is one of the major taxes collected, there are actually several taxes and fees that state residents and businesses pay in order to fund our government’s work.

In Fiscal Year 2012, the personal income tax accounted for 27% of all revenue collected by our state—making it the second largest of eight categories shown in Figure 1, below.

Click here to view the Fiscal Year 2012 Revenues by Tax Source chart.

The personal income tax is one of our state’s more important taxes because it asks citizens to contribute to the cost of government services based on their ability to pay—thus, making the personal income tax one of the more progressive taxes in our state. And while it is one of the more progressive taxes – it could be improved by adding another tax bracket on top of the brackets that already exist. This type of change would generate new revenue and take more into account a family’s ability to pay the tax.

In order to build a strong economy, our state needs quality schools and pre-schools, affordable colleges and universities, and effective job training programs to create the highly skilled workforce that can help businesses thrive and enable hard working people to support their families. Our taxes provide the building blocks of job creation and economic growth—without them, we limit Mississippi’s opportunities and undermine our own prosperity.

To learn more about how taxes are used in our state, check out the Nuts and Bolts of the Mississippi Budget: A Taxpayer’s Guide to the Mississippi Budget.

You can read more about other revenue options for Mississippi in this Fact Sheet.

Author: Francinia McKeithan Henry, Policy Analyst/ SFAI Policy Fellow

RealSense Prosperity Campaign has obtained a two-year, nearly $136,000 grant to provide financial education services to the employees of area non-profit organizations.

The non-profit was one of eight in the U.S. chosen as a recipient of the grant. Jeff Winkler, the director of RealSense, expects to have about six non-profit participant organizations by the time the program launches this June, and a total of 700 employees, from 48-72 different non-profits, over the course of the two-year grant.

RealSense is a non-profit coalition led by the United Way that locally is known for its free tax services and also provides free financial education resources and information. One of the ways in which the organization provides those services is on-site for employees.

The grant that is paying for this program is from the FINRA Investor Education Foundation.

Winkler said a growing number of employers are asking for the services as a way to enhance their wellness programs.

Winkler said the type of financial education provided can be customized to each company, and can range anywhere from the basics of maintaining a checking and savings account to retirement services and investments.

A survey that RealSense conducted in 2012 found that 70 percent of past participants had checking accounts, compared to 48 percent who had one before they took the class, the number who incurred overdraft fees dropped from 33 percent to 18 percent and the percentage who had a written budget increased from 32 percent to 59 percent.

Winkler said that the financial education could be useful for anyone, not just those who have financial challenges.

“The fact is this is a rapidly changing environment,” Winkler said. “Not getting a refresher could cause someone to make a costly mistake.”

RealSense and Wells Fargo announced in early 2013 that the non-profit would have permanent office space inside Wells’ Historic Springfield Community Learning Center.

More information about RealSense is available on the organization's website

The federal Earned Income Tax Credit does more than any other program to keep working families out of poverty. As this map shows, the EITC brings hundreds of millions of dollars to Ohio each year, benefiting families and communities in every county.

The map also provides estimates of the benefits a state EITC would bring to each county, at both 10 percent and 20 percent of the federal credit. In 86 counties, at least 10 percent of households would claim a state credit. At 20 percent, a credit would provide the average recipient with about $420. For more on the federal program and an Ohio credit to supplement it, see Small Investment, Big Difference: How an Ohio Earned Income Tax Credit would help working families.

View the Impact of a state EITC by Ohio county map here

Notes on the data

Data are from tax year 2010, collected from returns filed in 2011. Policy Matters Ohio analyzed data provided by the Internal Revenue Service to the Brookings Institution. Data from 2009 and 2010 are not comparable to past years because the IRS changed the way the data are reported.

• Total households refer to the number of tax returns filed in a county.
• Total EITC households refer to the number of EITC claims filed in a county.
• EITC percentage of all households refers to the number of EITC claims as a percentage of all households filing taxes.
• Federal EITC amount is the total amount of EITC dollars refunded to each county.
• Average federal EITC amount is the amount of EITC dollars refunded divided by the number of EITC recipients.
• Percentage of EITC households using paid tax preparation refers to EITC claiming households who use paid tax preparation to do their taxes. This does not include those who pay for a computer software or online-based platform for tax preparation.
• Percentage of EITC households purchasing refund settlement products refer to tax refund anticipation loans (RALs) and refund anticipation checks (RACs), which are brokered by a paid tax preparer and used to pay for the preparation. In recent years, RALs are less available due to newer regulation and that the IRS is no longer providing the debt indicator, which allowed paid preparers and lenders to know if the IRS was releasing the refund. Consequently, RACs make up a larger share of the refund settlement market.
• State EITC estimates are calculated by taking 10 and 20 percent of the of the federal credit amounts for each county.

Following the release of the CFED's Assets & Opportunity Scorecard in Massachusetts, the Midas network was busy with bill filing at the beginning of our 2 year session. The report on Massachusetts shows that despite having very high average incomes, relative to other states, many Mass households are financially fragile.

Though 12% of Mass residents are considered below poverty-which is likely an underestimate in this high-cost state- 37% of Mass households are one emergency away from financial disaster and 47% have sub-prime credit scores. Th CFED's national report was covered on national media, including NPR, Huffington Post, and the Twitterverse, and the Massachusetts report was covered locally in CommonWealth Magazine, on WBZ, BlueMassGroup, Boston Business Journal, and MassLive.

Financial security bills filed:

An Act Removing Barriers to Financial Stability and Asset Development for Low-Moderate Income Residents will increase asset limits for people on public assistance, allowing them to save money in preparation for making a transition from public benefits. It responds to the situation wherein people are trapped on public benefits because they cannot save or earn enough to substitute them, causing the so-called "cliff effect" (loss of stability) that results when transitioning off of benefits. (HD 1270/SD604) {Sen Eldridge/Rep Forry}

Pathways for Family Economic Self-Sufficiency would create some pilot education and training programs for low-income families to be administered by the Commonwealth Corporation. Not an asset bill, but it does support financial mobility and is strongly supported by Midas members, ABCD and Crittenton Women's Union.(HD872/SD501) {Sen Donoghue/Rep Khan}

A Bill to Increase the State Earned Income Tax Credit (EITC) from 15% to 20% of the federal EITC. It adds to what is considered the most effective anti-poverty program in the country. (SD883) {Sen Creme}

An Act Relative to Establishing a Disaster Emergency Tax Credit allows working poor to increase their tax refunds by applying the Earned Income Tax Credit thresholds to replace items ruined in disasters declared by president. For people who typically do not own homes and do not qualify for Small Business Administration loans under FEMA and are most economically vulnerable because of displacement in housing and jobs. An asset-protection effort. (HD3047) {Rep Fox}

We will support later efforts to increase financial education and savings during the budget process in the coming weeks.

Thank you to those who made calls to support financial security!