As Benjamin Franklin once wrote, "In this world nothing can be said to be certain, except death and taxes." While we aren't able to stave off death, there is something vital we can do to help low-income Americans with their taxes.
That's why Sen. Sherrod Brown (D-Ohio) and I have introduced the VITA Act of 2011. This legislation would permanently authorize the Community Volunteer Income Tax Assistance Matching Grant Program.
The program provides trained tax-preparers to underserved communities to help Americans properly prepare their taxes and file for crucial money-saving tax credits. Congress must pass the VITA Act of 2011 to permanently fund this critical program that saves money for taxpayers and the federal government.
You read that correctly -- VITA actually saves the government money. VITA programs help reduce error rates and processing costs, thereby saving the IRS $1.8 billion a year. Tax compliance rates rise because most VITA beneficiaries are filing their taxes for the first time. At a time when important federal programs are being slashed, saving VITA should be a no-brainer -- we make money in the deal.
VITA also boosts the economy and increases the return on investment for communities. By putting money back in the wallets of low-income people, VITA enables them to increase spending on essentials in their community, thereby increasing their spending on education, mortgages and other investments. For many, this encounter with financial services is a gateway to building individual assets, such as savings accounts and college tuition funds.
In general, VITA is a crucial program for serving low-income communities and helping eradicate poverty. By lifting Americans out of the clutches of poverty, we can in turn increase the nation's economic productivity and, therefore, our gross domestic product. President Ronald Reagan understood this concept of rejuvenating the economy by reducing poverty, and came up with a way to do it -- incentivizing work over welfare by taking the country's poorest off the tax rolls. The result came in the 1986 bipartisan reform with the expansion of the earned income tax credit, the largest public assistance program our country has today.
The EITC is an extremely successful program that lifts 4 million people out of poverty each year. Studies show that every dollar of EITC refunds translates to $1.58 in local economic activity. Unfortunately, low-income workers, the elderly, people with disabilities and those who lack a thorough grasp of English are less likely to claim the credit.
Many of them are not well-informed about the tax filing process or able to pay for tax assistance services. While we may have created a tax credit to support the people who need it most, if it goes unclaimed, it's worthless. This is where VITA comes into play.
VITA transforms the EITC and other tax credits from policy into reality for thousands of needy families. In 2009, community VITA programs prepared more than 1.2 million tax returns, including 400,000 EITCs, resulting in $887 million of refundable tax credits for their clients.
Funded primarily by nonprofits, community organizations and local governments, VITA programs have suffered funding cuts in the recent economic downturn. Meanwhile, the demand for services is rising dramatically. Community VITA programs have received appropriations from the federal government since 2008 in the form of a matching grant program. While the grant program provided $12 million in the 2011 tax season, there were program requests that went unfilled -- with a need exceeding $30 million.
With the federal deficit out of control, our economy floundering and people cinching their belts until they can hardly breathe, we need programs such as VITA to relieve financial stress for both citizens and the government. By providing Americans a service that puts money back in their wallets, we can help a single mother buy schoolbooks for her children, help an underemployed construction worker catch up on his mortgage and give a family a chance to buy presents during the holidays.
It is in Congress' best interest to support cost-effective programs such as the VITA Act of 2011 that will stimulate the economy and save money for the federal government. The tax breaks are already there -- let's give people the opportunity to use them.
This piece was first published in Roll Call on 11/4/11
Congressman Michael Honda is Silicon Valley's Representative. He has represented the 15th Congressional District of California in the U.S. House of Representatives for a decade. In Congress, Rep. Honda is a member of the House Appropriations and Budget Committees and Chair Emeritus of the Congressional Asian Pacific American Caucus.
Follow Rep. Honda on Facebook
Follow Rep. Honda on Twitter
Follow Rep. Mike Honda on Twitter: www.twitter.com/repmikehonda
just wondering?
is this okay with everyone?
Now that it is 2011 that number is most likely higher.
If "making it easier for poor people to file their taxes correctly" would "save the IRS $1.8 billion a year," then something is fundamentally wrong with the tax code ... and it could well be that the tax-code right now goes on for thousands of printed pages. If it costs you nearly $2 billion a year just to fix the paperwork, just for the poor, then there is something desperately wrong with your tax-collection system.
and everyone wants the rich to pay more taxes but they don't want the tax code changed.
you cannot have it both ways.
The "poor" shouldn't need professionals to translate tax code written by the rich.
blame congress 100%.
NOW I see why VITA is required.
WOW
I ask that readers take a look at the books of Henry Carey, Lincoln's economic advisor, where he compares the American system of economy to the British Imperial system foisted on India in the 17-18 century. Our current system, as it is applied today, is suspiciously similar to the Imperial system.
As the system we are forced to operate and survive under is collapsing the population's physical economy, it would be better to correct our perspective and terminate the monetary financial, debt based, hyperinflationary, system that rewards speculators at the expense of the population.The US citizenry must be cognizant of its existential crisis; our survival and future depends upon this great challenge of confrontation, so that America can survive and thrive, creating the higher order of existence humanity demands.