tv Key Capitol Hill Hearings CSPAN February 2, 2015 10:00am-12:01pm EST
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is very complicated. i am not sure i understand the question. host: if you want to follow william hoagland we always appreciate your time on that the "washington journal." that is it for today. we will be right back here tomorrow morning at 7:00 a.m. eastern. have a great monday. ♪ [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> today, president obama's budget is arriving on the hill.
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the house gaveling in at noon eastern time for speeches before starting legislative work at 2:00. they will be considering two bills today. any requested votes in the house will be held after 6:30. they will also seek to repeal the health care law on tuesday. over in the senate, in today at 4:00 eastern, working on a bill dealing with military suicides. then they will seek to work on language to block the president's immigration action. the budget being prepared for release today. you can take an in-depth look for the budget for yourself on our website at c-span.org later today.
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we also want to let you know that we are taking your thoughts on the president's budget requests. leave your comments on our facebook page or feet us -- twee t us. >> we spoke with industry executives at the -- in las vegas. >> at the end of the day, the internet needs strong enforceable, and effective rules. they need to include nondiscrimination, no blocking, reasonable network management. they need to be effectively enforceable. >> the problem we have now is where the net neutrality issue has gone and that it is not focused on the substance. i think there is a lot of consensus.
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it is focused on the fcc plus legal authority -- fcc's legal authority and what jurisdiction they should use. our fear is that they will undo a regulatory status that has existed for over a decade. >> tonight on "the communicators." >> next, we will take a look at the earned income tax credit. ohio senator sherrod brown talked about his support for the credit at the corporation for enterprise development on friday and other federal efforts to provide relief to low income americans. this is about an hour and 40 minutes.
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in the folders provided for you, you will find resources and i would encourage you to visit our website to view our recent video interview with one of our keynotes because today professor catherine eden. without further a do, i would like to introduce a dear friend of the hatcher group and president of the corporation for enterprise development. [applause] >> it is such a pleasure for us to be cohosting this event. this is a day about hope.
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it is not just about income. it is also about assets. our whole philosophy is we want to help people build their future by being able to invest in long-term assets that help them live the american dream. i am especially grateful to my friend lisa adams who introduced us to cathy eden and her insightful book on the ei tc. it is much about how this works and some really heart-wrenching stories about how people make their lives work under incredibly difficult and challenging circumstances. all of us here are dedicated to public policies to make it easier for people to be the productive flourishing people that we all want them to be. we are thrilled to be hosting
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this event. the eitc program fits so well with what we are doing. the programs aim to provide low and moderate income taxpayers with new tax time opportunities. i am happy to recognize the taxpayer opportunity network which brings together organizations and individuals who provide tax assistance to low income communities. this also builds on our experience with the assets an opportunity network. we are expanding the reach and impact of asset building strategies in every community in the united states. i am greatly pleased to invite a
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long-term member to introduce senator brown, who has been such a champion of the sherrod brown. --of the eitc. he is from ohio, but more importantly, he has been a tireless advocate for expanding tax time opportunities to low income americans. he is also one of the few people in america the make me look shy. [laughter] [applause] welcome. >> following andrea is never an easy opportunity, given the energy that she brings. thank you enter lauren for starting the morning on it.
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it is with great pleasure that i introduce our first keynote speaker senator sherrod brown, who hails from ohio. my parents are overjoyed that i am introducing a sitting senator. my policy friends are excited i am with professor eden. it is all about perspective. there are so many different facets of asset building. i want to emphasize the growing importance of the delivery system for the eitc. and professor eden's book, she touches on this issue. if families are paying for this to get their refunds on debit cards, they are losing their earned income and are being gouged, quite frankly. text servers must be regulated and should provide good-faith estimates before and not after
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tax returns are prepared. we have released a report this morning that calls for such measures, including a disclosure box, like what is going on with credit cards and prepaid debit cards. more so on point, to talk about perspective, senator brown is a longtime supporter and innovative thinker about the earned income tax credit. he has supported the permanent expansion for the eitc and a longer filing range for married filers. senator brown understands that working families and communities need dollars for economic development and for achieving and growing assets. his newest bill, we are particularly excited about. he wants to help working families pay bills and not just a tax time.
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if it functions as a method to not help families use payday loans, i am doubly excited. here are a couple of things you might not have known. he ran a free tax preparation site out of his office outside of cleveland. he opened up the office. for the past few years, he has worked to increase funding for text operation by three times the amount than was currently -- tax preparation by three times the amount that was currently allocated. there is some time after the senator's speech for five minutes of questions and answers. [applause] >> thank you.
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thank all of you. you look great. i don't know what the injury rwawas. [applause] thank you. thank you to all of you. think you for helping us and our office. thank you for your terrific work. this is my real voice. i talk this way. i don't smoke. i just talk this way. [laughter] this is a true story. this guy standing next to my wife, he turned to her as i was speaking and he said, i hate that guy's voice. she said, really?
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he said, yes. it is like fingernails on a black or. she said, i kind of like his voice. you know when i really like it? she said, i really likes it when he wakes me up in the middle of the night and says, i love you baby. [laughter] [applause] my wife is a very good writer. she is a political winner. her name is connie schultz. check it out. you will laugh at more things than i just told you. [laughter] david is such a gem and so important in northeast ohio. he has testified a number of times to subcommittees that i have chaired. he is a neighborhood housing services in cleveland.
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he has been so valuable to northeast ohio. you can tell your parents that and your academic friends can tell them too. [laughter] a year ago this month, i went to martin luther king day breakfast and a minister said something that we all know to be true and he probably said it better than i had ever said it he said, your life expectancy is connected to your zip code. whether you grow up in ohio or east cleveland -- appalachia, ohio, or east cleveland, when you grow up in shaker heights or whether you grow up in a nasa went suburb or wherever you grow up, your life expectancy clearly -- an affluent suburb or wherever you grow up, your life expectancy clearly is connected
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to it. it obviously should not be that way in a country that is that rich. it is a state that is underinvested in public health. we are underinvested in early childhood education and in the kind of safety net that really does give people opportunity -- and so many low income people in our state pay for it every day. it is an economic, moral, and political issue. 63% of americans believe the u.s. economic system favors the wealthy. well over half of americans think the system think their government works more for wall street than it does for main street. when workers wages stagnate
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when they struggle to provide for their families, we have a moral problem. when people work hard and take responsibility and do the best they can, but when they believe the economy is rigged against them, we have a political problem. when the next generation of workers retires with little savings or no savings and no defined pension benefit anymore, we have an economic problem. that is why the eitc and the child tax credit are so very important. you know its history. it is close to 40 years old. it has been next banded by every single credit area -- expanded by every single president. it doubled the results of welfare reform.
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welfare reform which i opposed when i was in the house. welfare reform did not do anything close to what it was heralded to do. whatever it did do, the earned income tax credit did much more. it has lifted more children above the poverty line than any other government program. in 2012, more than 28 million americans benefited from the eitc. you know these numbers. it is important to emphasize them. it is important to tell stories around these numbers. we can stand up in front of people and talk until we are blue in the face about public policy, but we need to tell stories about who this affects and the effect on them. alicia durand told me that she lives paycheck to paycheck in cleveland, but getting the eitc every march or april is the one time of year she can pay off her bills.
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rose in toledo works as a manager at a fast food restaurant. she works for $9.35 per hour. her family struggles to pay bills. the eitc has been a lifesaver since she found out about it through her local vita center. thousands of stories like this have lifted people above poverty. in the state of the union address, i thought president obama's one, he laid out plans to reform the tax code by making the ei tc and the ctc permanent. if you work in this town or you live in this town and you hang around these buildings, what you hear about tax reform is almost always, we have got to lower the corporate tax rate. that is how the debate is begun.
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but we cannot let the debate begin that way. i thought the president emphatically began to change that debate in his state of the union. we are not going to have corporate tax reform until and unless we expand the eitc and we make those expansions permanent and we make the expansions for cdc also permanent. otherwise we don't attract broad support for any kind of tax reform. it is something we should be able to agree on. we know that the eitc and the ctc, like the minimum wage -- in 2011, the presiding officer in the senate was barack obama and i stood up, you address the
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chair, my first words in january 2007 were mr. president and i think he liked the sound of it. [laughter] anyway. a true story, but probably not entirely true. jason jacobs was my guest at the state of the union. he grew up as a middle-class working-class kid. he got his degree to teach at an ohio university and has not been able to find a job as a teacher. he is working sap or professional and the west clairmont school district. -- ap peer professional in the west clairmont school district. this would triple the work of the eitc.
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expanding the childless eitc is in our legislation that president obama proposed. it will lift more than a half-million people out of poverty and will reduce the poverty for an additional 10 million. for jason, who right now is ineligible for even one dollar of eitc, the credit under my plan would mean about $600 for him. he is taxed further into poverty because he gets no help from the earned income tax credit. we know what it means beyond putting money in families' pockets. it is similar to the children's health insurance program. i'm introducing that legislation and the next week or so. 130,000 children benefit from
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the children's health insurance program. it means not just giving parents the peace of mind of knowing their children have insurance. it is not just giving parents peace of mind that they can do a few things for their children that they could not do. it also mean better performance in schools missing fewer school days, when they are at school, they are less likely to be sick. they may be less likely to be hungry because their parents have a little bit more money in their pocket. if we care about these families in these neighborhoods, but this society also, so we ways -- raise children that have approvingly higher test scores, graduation rates, college attendance rate more people getting to college and finishing college -- it means working more hours, higher salaries, it means we enable the cash poor the 44% of households
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that have less than three months worth of savings -- almost half of people in this country have almost -- less than three months worth of savings. half of the people in this country who are on social security, depend on social security for more than half their income. if we're ever going to build wealth in this country and give young children a chance and older people a chance from earning a more secure retirement, these are very important. if we fail to act, if we fail to act, 50 million -- if we fail to renew and make permanent, 50 million americans could lose part of their eitc or ctc. that is the worst kind of class warfare aimed at working families. when people who dress like me and have good titles and get good salaries and good government paid pensions and health care don't rise to the occasion -- one they don't
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expand the program sent to the children's health insurance plan, things that have been bipartisan in this country for most of the last 30 years -- the minimum wage now has a third less buying power than it did in 1968. it is not mostly teenagers. it is mostly people who support their families. it is the worst kind of class warfare. these worker needs help out of poverty, not to be taxed into it. that needs to be our mission. we are talking about the early refund ei tc. david talked about payday lending for a moment. there are more payday lending stores in the united states then there are combined mcdonald's and starbucks. think about that.
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in upper income neighborhoods there are starbucks and mcdonald's. if you look at the whole country, think of the concentration of payday lenders in moderate and low income neighborhoods. what happens for so many people the woman rose in toledo, she depends on eitc, on that check that she gets. she depends on it to pay down her bills, just to catch up. what if in october rose is forced to have some unforeseen problem that costs money. which poor people always are more likely to have enter car breaks down and she cannot go to work because her car breaks down so she has to go to a payday lender because she has not gotten her eitc refund. the average payday lender, the average person who goes to a
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payday lender goes seven times. you get the first payday loan and you cannot pay it all back, so you go again and again and again and again. you end up paying 300% or more. some testified up to 500%. once you are in that downward spiral -- about 20 years ago when i lived in columbus, i tutored a young man, a man who had dropped out of high school and he wanted to learn how to read, so he could get a better job. he worked as a parking attendant and a hospital. he wanted to be able to read out loud from the bible at his church. about one out of four times we would meet because i had young children and i was a single parent and on sunday night, i could not really leave the house, he would come to my house and i would tutor him. about one out of four nights
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his car would break down. he just could not get there. my car did not break down. i had a good job, a decent income, a car that was three years old. the cost -- i am preaching to you, you know that -- the cost of people -- it costs money to be poor. that is the reason for this event. we want to allow an up to $500 early advance, not paying interest on it. it costs the government very little money to do this. you can get a $500 advance that will mean your refund is $500 less of course but it can keep people out of that downward cycle of getting a payday loan and then what all that means. i will close with this.
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as you advocate around here, tell your stories. tell this story. you are all in this business. pope francis exhorted his parish priests to go out and smell like the flock. we do public policy in this town. we are supposed to understand the lives of a broad section of people. we don't do that well enough. lincoln, when he was president his advisers wanted him to stay in the white house. he said, i've got to go out and get my public opinion bath. it is important that we go out to people and hear the stories. we want to hear the stories that we then pass on to policymakers and others. i will close with this. john lewis, who in number of us
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-- tim and i are leaving a congressional delegation to go to selma to mark the 50th anniversary -- i was able to take my young daughters there back in 1998 the first time we did a congressional trip. there were about six of us from the house that went. john was among them. john tells the story. when he spoke at emory university commencement this year -- i want to read the words that he said. he said, when i was a kid, i saw those signs -- he was born in 1940 -- i saw those signs that said white men colored men white women, colored women white waiting room, colored waiting room -- i came home and asked my mother, my father, my great grandparents, why? they would say, that's the way it is, don't get in the way,
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don't get in trouble. in 1957, at the age of 17, i met rosa parks. in 1958, i met martin luther king jr.. these two individuals inspired me to get in the way, to get in trouble. i encourage you to find a way to get in the way, find a way to get in trouble, get in good, necessary trouble. as you tell your stories, think about getting in good and necessary trouble and encouraging your friends to do the same. thanks. [applause] another thing about telling stories, you don't have to take questions. [laughter]
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>> on the actual -- i am an actual vita volunteer and tax attorney. [applause] i have been in briefings with very conservative theorists that say eitc is a better solution to helping the poor than the minimum wage. we can debate the minimum wage another time. i will say in personal experience that my in-laws were id frauded and people used, this is the issue about eitc fraud. they had eight kids, somebody invented another two kids got in eitc refund on a debit card -- i'm hearing from in-laws, accountants and the district -- how do we cut down on the eitc
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fraud, the debit card fraud? if we can cut down on those things, we can actually provide more eitc to people. >> thank you for raising that issue. opponents to the eitc expansion and chrominance -- permanence will use a 25% fraud number and that number is misleading, in part because, unlike tax returns for higher income people, there really is a challenge to an audit from an eitc beneficiary then there might be to somebody whose income is much higher, number one. the 23% number would be dramatic we reduced, may be as much as 50% if the process of appeal were to play out because in many
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cases, it is the government possible escape -- governments mistake. sometimes the itc credit --eitc credit that goes to the beneficiary, to the taxpayer, to the earner is actually an under payment. that is part of that 23%. important to keep that in mind. also important -- i had a conversation with a senator who will remain nameless for this conversation who said the 23% and i said, we obviously should audit these returns and clean that up. i said, you know, but if you poured more into eit see enforcement --eitc enforcement democrats are not going to support more eitc enforcement
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and not more corporate enforcement. but the clay this straight, do it fair. -- let's play this straight, do it honest, do it fair. we don't seem to back away from other federal tax policies because there is fraud. in most cases, the fraud is only a few dollars. there is not that much money at stake per taxpayer compared to real fraud or real miss payment or underpayment or overpayment among higher income people. i appreciate your comments. i think we need to deal with this and answer that question better than i just did with facts and figures, but that is simply not a recent -- reason to do that. and thank you for being a worker and volunteer. thanks, everyone. [applause] >> thank you so much, senator
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brown. we appreciate your fight for lower income working families. it is my distinct leisure to introduce professor eden. she insisted that i call her kathy. which is uncomfortable. [laughter] in her new book, she provides a look at the complex lives of low income workers. it is moving. it is insightful. it is quite prescriptive. there are great proposals for reform that hope we can talk about today. please join me in welcoming kathy. [applause] >> i am actually five people. lisa adams is the best literary
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agent in the nation. if not, she is the best for academics who want to write people -- things people want to read. three graduations, three academic jobs, five marriages they are not people and scholars in their own right. imagine a cast of five appear as i speak. i want to start with a story about david ellwood. in the 1980's, he give us the first evidence that most welfare recipients were not long term but rather short-term recipients. he went around the country trying to defend welfare. he found that this was the worst job in america. he got hate mail. he was vilified on the oprah winfrey show. there was even a fight that was caught on camera. recipients of the program
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refused to defend it. any effort to help the poor had to be fully in line with american values, especially the primacy of work and the independence of the individual. based on this insight, he came to washington with an idea. under david ellwood's inspirational leadership, the modern eit see was born. you might want to think of this is a flourishing from adolescence to it altered. as i was traveling around the country interviewing hundreds of low income mothers about how
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they paid their bills -- i wrote a book called "making ends meet." to describe the incredible struggle that those who were on welfare and those who were trying to hold down a job had in making the basic bills and all the ways the shortfalls were causing problems for families. imagine my surprise when i returned to talk with poor people about their budgets come up workers who were receiving the modern eitc. this was not making people feel stigmatized and shamed the way
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you collected welfare in the old days. it was almost as if you had to trade your citizenship card come across the road from being a citizen to being an outcast. in east boston, there was this old keynesian -- dickensian thing over the office with wire mesh covering the windows. imagine the experience of walking through those doors as opposed to the experience of walking through the friendly doors of a vita site or an h&r block to claim your benefits like every other tax player. what the eitc seems to be doing
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for people is making them feel a sense of incorporation. the very famous slogan of that year was i got people. it was repeated again and again in interviews as people described the incorporating experience of feeling that the government was rewarding them for doing the right thing and going out and working. the most profound thing about the difference of the interviews we were conducting in the late to thousands as opposed to the early 1990's was the sense of hope for upward mobility. hope for upward mobility. this is almost absent from the folks of the 1990's. sometimes $8,000, 40% of your income could inspire that.
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this attachment to work, the sense that you are getting something you earned, something you deserved shapes of people spend money. what we found is remarkable responsible financial behavior. we followed 110 tax filers from the moment they received their refunds to six months later when the eitc was fully allocated. 25% went to debt. some of that debt was accrued during the year because you usually cannot make ends meet on your wages alone. another half of that debt was for a very long-term debt that people wanted to clean up on, so that they could move ahead and acquire more assets.
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most centrally, a home. 20% was paying bills that you normally cannot pay every month and paying ahead, particularly for car insurance and rent. to create a personal safety net that can almost be counted on. 40% went to mobility purposes. those of you in the asset field can cheer. 17% of the total was for savings. the rest was generally for durable goods, cars, standalone freezers, that allow you to live more cheaply and greater access to wider labor markets and higher education. then there was just a little bit extra. 10% of the average refund was invested in kids. i'm going to tell you one story.
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this one was really near and dear to my heart. the mom's name is deborah mckinney. she had a fourth grader who was really struggling in school. it turns out that the fourth grader's birthday was right about the time when she usually claims her credit. she said, if you can pass the fourth grade, when tax time comes around, i am going to take you to the best seafood restaurant in america. this little girl loved seafood. her little girl passed the fourth grade and they had to find the best seafood restaurant in america. it turns out that although boston has many fine seafood restaurants, it does not have the best one in america. you cannot even find the best seafood restaurant in america and massachusetts because massachusetts has no red lobster chains.
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[laughter] the entire family drove all the way to connecticut and the $64 was the best part of the mother's ear. 10% goes to support people's identities as parents. there are shortcomings of relying so much on the tax code. it is not acting as the safety net for people for homework does not work sometimes. weise to cover 50% -- we used to cover 25% and now it is 50% -- 25 print -- we need a vigorous temporary safety net when the eitc is not enough, when work is not enough. we need to expand work opportunities. there are too few jobs, too few
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hours to go around. it is almost impossible now for many poor parents to find full-time work when supporting children. we have also found in our fieldwork that work can be healing in and of itself. it can provide a sense of incorporation that is so vital, so important, as long as that work has enough give. in conclusion i would say, in doing this work and collecting these stories -- if you read the book, you can have stories of your own even if you have not collected them yourselves. the critical insight we came away with from doing this work was that everybody longs to contribute. part of the reason people felt so proud to claim the credit was that it was like a badge of honor that they were members of their communities, they were citizens, they were taxpayers, they were playing by the rules they were making a contribution.
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over and over, families said, i felt like a real american. thanks for coming. [applause] >> thank you. thank you for speaking and for pushing the field forward with your research. i am really happy to invite the moderator of our panel to join us. it occurs to me that greg is fundamentally a storyteller. he has told stories through his work as editor of talkpoverty .org. he did the same one he had a weekly column with the nation. he has been described as one of the most consistent voices on poverty in america.
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he is consistently thoughtful and on point. please join me in welcoming him and the rest of the panelists. [applause] >> thank you so much. i have the pleasure of moderating this distinguished panel. seated right next to me is lori anne sales. she works with the national human genome research institute area she is going to help us
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tell stories around the numbers today. you met dr. eden. the distinguished bloomberg professor. we cannot say enough about the book. that you and your co-authors have recently published. i know you are not going to hock it, but i will. [laughter] seated at the next table is the senior tax policy analyst at the dc based think tank on budget and policy priorities. welcome. at the end of the table is barb montegonee, the past board member and president that runs critical vita sites throughout the d.c. area. let's get right to it. i'm going to start with a little
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background information. some things you had shared with me. you faced the prospect of being a single mother without a high school diploma, but you graduated high school on time you want on to earn a ba in public health at the university of maryland, college park. i'm a maryland or myself. [laughter] you went on to earn a masters in public administration with honors, i believe. not only did you get married but you are a candidate for the delegate to maryland's general assembly. cam up a little short, but it was a good run, and we were rooting for you. we will talk about your film rights. i'm very interested. you have quite a story.
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you said that family and various government programs were very essential to your success including your success with the eitc. could you talk about how that helped both you and your daughter? >> i think the senator touched on it a lot. that time and over the months waiting for you to file your taxes, you kind of incur a lot of unnecessary or unexpected expenses, whether it is with your car breaking down for aftercare. -- or aftercare. when you have this opportunity to have extra money at a time when it is unexpected, it puts you in a more comfortable feeling. being in poverty and being low income, it is a sense of stress. you are not really sure what to
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expect day today. it kind of get you back on track. it is a little cushion to help along the way throughout the year. >> how did you see that impact your daughter in particular. >> she got to take advantage of school activities. i was able to put her into ballet classes. as a single parent, you try to overcompensate for what your child is missing out on in your mind. doing those extra things helped make her feel like she was not missing out. it helped a lot. >> in terms of painting the eitc , dr. eden and senator brown both mentioned the importance of vita sites. can you talk about with that did for you and your family? >> going to those sites and
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having the people volunteer their time to help you, it is a reassuring feeling, it is a comforting feeling. you don't have the stigma of someone looking down at you. you are in an environment where people are ready to help you. it is a comforting feeling to know that those services are available to people in need. i joined the montgomery county action agency because i wanted to advocate for people who were in my position and speak to the people that would affect them. knowing firsthand on the planning side and how much of a benefit this would be to people and really being able to contribute to the services provided at those sites was a really good feeling. >> i promise i'm going to get to the rest of the panel.
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one more thing. you had an experience with a non-vita site and you can contrast the two. >> before becoming acquainted with the vita site, i did not go to h&r block, i went to a private tax-free parrot that i found in the yellow pages. -- tax preparer that i found in the yellow pages nfl account was taken advantage of. -- and i felt like i was taken advantage of. i am in need of money. i'm going to do whatever i can. i did not get what i was supposed to get on my return. luckily, we have the trusted sites that are available, so that people are not taken advantage of in the situation. >> thank you. dr. eden, lori ann's experience
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with the eitc is this consistent with the experiences of families you have spoken with three your work? >> people love the symbolic act of filing their taxes with other taxpayers. the fees you pay as sites are meaningful and the temp tatian to get the rapid refund -- the temptation to pay a heavy price to get your refund early is real, especially when you have debt collectors breathing down your back. the thing that i really heard her say was that the relief of parental stress, the ways in which the eitc can scaffold your
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efforts to make your child feel like an ordinary american kid are very consistent. it is not like the ballet lessons are one meal a red lobster per year is an extravagant parental expenditure. but the symbolism of those expenditures is so powerful both for a parent and a child. what we really want is for all people to feeling part of america. we want people to participate in their communities. what we have heard in the field is that this program and the way that we administer this program really has those benefits. >> i could be wrong about this, but wasn't their research about ei tc beneficiaries or participants being more likely to vote, for example. did i read that? >> we don't have direct evidence. but we do know that when you deliver benefits to people in a
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way that respects their dignity and treats them as citizens, they are more likely to vote. i think there are probably all kinds of spillover effects that are positive from the eitc above and the on the health effects that have been documented. researchers ought to get out there and look at these citizenship benefits, as well as the financial benefits. >> there has been a lot of research on some of the long-term impacts of the eitc particularly as they relate to children. if you could speak to some of that and some of the other long-term impacts. >> it is a striking body of research that just keeps coming. it is fascinating. eitc has gone across the lifecycle. that is particularly the case for children and families. for example, there are links between increased eitc use and
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improved maternal and infant health. right at the beginning it is really important. onto the schooling, there is research that shows that higher eitc links to better school performance in elementary and middle school. we are starting to see research that there is a basic college enrollment association with large eitcs. researchers think that is because of the better school performance all the way through but also because it makes college more affordable. one step further, we are starting to see research that children who grow up in families with increased income from the eitc, when they get to be adults themselves, they are more likely to work more and earn more. all the way through, we are seeing these really important impacts. going back to the theme about vita, these impacts cannot
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happen unless they claim the credits they are owed. >> that is exactly where i was going. that research is pretty astounding. the community tax aid runs through d.c. can you look at the supply and demand of sites in this area and to the extent you are comfortable, how that looks nationally as well? >> i have to warn you all that i am not rational about the eitc or about vita or the importance of what it is that we do. i will try not to get too emotional about what we are doing, but there are numbers. there is data. there is research. for 25 years, i have been helping these people. the research and the data
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reflects what i have been seeing for 25 years. there is not enough of a supply of people. various local counties in jurisdictions have their own programs. aarp has a program that is terrific. when you put all those programs together, you do not have enough people to vehicle to do a return for every single person who is entitled to claim the credit. that means that you have people going to preparers who charge them too much money or worse the upside of electronic filing and turbotax and programs like that is that it can make it easier and things can go faster and so forth, the downside is that anybody with enough money to buy a copy of turbotax can say, i can do your tax return
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for you. people who will deliver really create fraudulent people who will deliberately create fraudulent returns the taxpayer does not know about. there is a volunteer with our program this year who is in the irs enforcement division, prosecuting criminal on. one of the significant things he is doing is prosecuting against preparers who prepare parallel returns. as far as the taxpayer knows they are getting a return. they are getting the refund they are due. and then, there is this return that is filed that is fake that has a much bigger refund. that refund goes into the preparer's account. as far as the client knows, they are filing the right thing. there prosecuting these people.
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as the senator mentions, there is not a lot of funding, and so forth. so the demand is huge. the supply is very narrow. and congress really needs to take a better look at how to both fund the preparation efforts, and also, i will throw in quickly and then stopped talking, is that the irs tried to create rules to regulate preparers, to regulate who can do it, to get a certification. but a court knocked that down and said, sorry, you do not have the authority to do that. full disclosure, i also worked at the irs for four years. the point being that since the irs has been told they do not have the power to impose rules to regulate preparers, congress has to do it, because somebody has to do it. it is my clients come in after
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having been taken advantage of i these people, and they oh refunds they were not entitled to, but they did not know they were not entitled to, and they keep paying off the debt to the government. i am not rational about it, but there does need to be some degree of regulation so that you can go out to the community and say to these people, do not have your return done unless somebody can show you that they have this certification. the taxes are going out. they are not like, i am going to go do a front. return. you educate them, and they will do the right thing. >> it relates to the conversation we had earlier about era, and your irrational feeling. vita sites have the highest
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accuracy rate of any type of preparers. that is partially because, the volunteers have to go for certification and show they are competent to file these returns. in contrast, other preparers that do not have to go through competency certification have the highest error rate. this regulation overturn preparers is really important. >> it does not sound like right now there is a lot of political will in terms of expanding the supply of vita sites, the number of vita sites. i do not know if any of you are familiar with that or can comment on it. quickly funding for low income taxpayers, at best, it is stagnant. my organization applies for grants every year. in order to fund our operations. there is just not enough to fund all of the sites.
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you can fund a legal clinic that can help taxpayers once i have gotten into trouble, but if you fund the people who are actually doing the returns then the number of times a taxpayer will get into trouble will be last. but the funding, i do not have the numbers. i can tell you that at best it is stagnant, and it has not kept up with the demand. >> i want to stay with the politics for a little. senator brown had mentioned the eitc expanded under bipartisan presidents, both parties. sort of a feel-good story. i think we have a little bit of a potential storm on the horizon. if you can tell us a little bit about the eitc and child tax credit expansions that are set to expire in 2017, and why we need to be paying attention to that.
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>> unless policymakers do act at the end of 2017, really key provisions of the eitc and the ctc will expire. that means millions of families will face a loss of some or all of their credits. it would push more than 16 million people in working families including 8 million children, into poverty. this is a really critical priority for congress. what does that mean, if you think about a single mother with two children, who is working full-time at minimum wage, earning $13,500? she would lose her entire tax credit, $1725. if you look at the book, that is a really important amount of people who are struggling to get by, working and trying to raise children. making those critical provisions permanent is, we think, a really
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critical priority for this congress. we have heard news in the house over the last couple of days. there is an effort to make some other expiring tax breaks permanent, including tax breaks for corporations. without getting into the merits, we think that if anything is made permanent we think these critical credits for working families have to go along with them. >> did anyone have a lot to add to that? >> you must be thinking, how can anybody live on that? in meticulous analysis of these family budgets, you will not be surprised to hear that they cannot. we have made a pledge for a long time in this country that if you work, if you play by the rules you ought to not be poor and you ought to get ahead. the eitc is the way we make good on that promise in america. nobody is living high off the hog on the eitc. they are barely scraping by.
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this little bit of surplus that comes by for savings is effective and responsible economic behavior that i think all of us would applaud. the fact that almost one dollar in five is put away and saved is quite amazing. it is easy to lose sight of how tough families' economic situations are and how unstable the labor market is. the eitc's value in building a safety net so as to whether what is going on now with low-end employment is critical, and should be -- people ought to get rewarded for playing by the rules. quick senator brown also alluded to an effort to expand the eitc for childless workers. i wonder if you could tell us a little bit more about why that is critical, who it benefits.
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>> at the moment, we call them childless workers, and that really means childless adult and noncustodial parents. filers under age 25 who are not filing and claiming children are completely ineligible for at the moment, and those who are filing are eligible for only a very small amount. those working at the minimum wage would get any eitc of $25 if they were a childless worker. this is very small. in part because of that, childless workers, low income childless workers, are the sole group for which federal income and payroll taxes tax that the -- tax that group deeper into poverty. making more childless workers eligible for the eitc and boosting it so it is an amount that is salient for their lives -- that holds a really strong promise of increasing employment . some of the same effects we have seen from the eitc for families with children, and also reducing
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poverty. i think that is a really important policy priority, and going into the question of congressional interests, there has been bipartisan interest. >> did anyone else have anything to say on that? >> just in terms of my client it is funny. it is hard for me to explain to my clients why they do not get anything. you do not want to encourage them to go have children, but it is hard because they are working very hard, and even if they get the maximum credit, it is less than $500. that is on an income of $5,000 or $6,000. it is very, very small. you can say, from a policy perspective, that you do want to make sure that people who have young children need more
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support. but that does not mean that if your childless and you are working really hard that you yourself do not need support. i have to say that when i was right out of law school and making a very small amount of money, and i was filling out my tax return and i saw this burned income credit thing, i thought that is true. i do not make that much money. and then it said, you need to have a child. well, i guess i cannot get it. i think it is sort of an underappreciated population. >> i think the rub is the hardest for noncustodial parents, many of whom we need desperately to bring in the labor market. imagine if we could see the gains in noncustodial parents work effort, like we have seen for single mothers. it would literally change the lives of millions of children. then, there are noncustodial
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parents who are working and paying child support. they feel the unfairness of the fact that they are not eligible for the tax credit, quite keenly. >> i want to ask, through your work with community action, your work in montgomery county, if you are seeing with regard to childless workers, noncustodial parents, if you are seeing and could share anything about that. >> one our initiatives that we were at the forefront of last year was asking for full restoration of the earned income tax credit for county residents. we do see a disparity from the people who do not have children. even residents in montgomery county, they match her earnings and tax credit at the county level. it was decreased to 60%. now, it is back because of our advocacy efforts at 80%.
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montgomery being one of the wealthiest counties understands the extra benefit can help families, and goes a long way. >> the state eitc -- i was not familiar with county working on that as well. that is great. we're going to leave funny of time for audience questions. in a recent interview that you did with tax credits for working families, there was this great quote. you said getting to know the families, the research and interviews it will help you think more intelligently about policy and the poor, and whether you are conservative or liberal. i found that fascinating. >> like many at this table, when we conducted this research, all of the authors trained as
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volunteer tax preparers -- can i say that yes, it is hard? as it should be. i think it took me quite a long time to pass it. in my entire class of 30 students at the kennedy school, we all manned two vita sites in boston, one in the dorchester neighborhood and one in east boston. and if you want to know how poor people think, what their lives are like, there is no better way than to follow the money. it is a poignant time, i think sitting across the desk from a family or an individual, filing their taxes. it is kind of an intimate moment, where you learn some very private things about an individual. there is a chance for you to build on that feeling, that people so value that they are citizens and taxpayers. you can give a lot in that
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interaction, but you will come away with an understanding of the working poor that will really transform you. when you act, you will have the voices of real people in the back of your mind. >> if i can say one thing about the actual experience of working with the client -- they have to tell you very personal things. you may need to know about their children, where they are living, and what they have been doing and if they have lost their job. you really have to deal with them on a very personal level. i had a client years ago, and i was at someone else's site, doing the return. if i start crying, do not get upset. this woman had been through a harangued a situation. she had been evicted from her apartment because she had lost her job. she was in a homeless shelter with her children.
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her sister took in the children but would not take her in. she got a job at the cvs, working at this one hour photo. this is a job that some of us might not value all that much. we might not think this was such a great thing. this was the most wonderful thing in this woman's life. she came in for me to do her return, and she said how blessed she was that she had this job and it was great, and the people she worked with were fabulous. i did her return. the person who had done the return before had not figured out about the earned income credit. i tell her she is going to get this refund of like 3000 something dollars. and she threw her arms around me and she said, you are giving me my children back. and you go, my god. because she was going to now have money that she could then put down a security deposit on an apartment.
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it is not that she could not pay the rent from the money she was making from the cvs, but she did not have the money to be able to get a place to live with her children. and when somebody says to you you are giving me my children back, you carry that with you forever. it is that profound and impact that this tax credit can make. it is not puppies and babies. taxes, it is so boring. but it is profound, the impact that happens. >> i forgot a question i had wanted to ask early on. it was actually for you, professor. anyone can comment on it. the eitc program functions much more then just as an income boosting program. it has an impact on asset building. i did not know if we had addressed that as much as you might like to speak to. >> as i said, 40% of the refund
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is typically spend toward mobility purposes. 17% of the total is set aside for savings, and much of the rest goes to human capital development, and especially durable goods. so they are a measurable improvement in people's lives that are laborsaving. when you have a standalone refrigerator, you can shop more efficiently, and buy in bulk. they make the day-to-day schedule more doable, especially if you are able to buy and maintain a used vehicle. these are measurable improvements to people's lives. what is most meaningful is the sense that you can get ahead that you can be something different from what you are now that you can enter the middle class. eagle clan all year for how to
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spend their eitc, making detailed calculations on the backs of envelopes. they have multiple year plans for how they are going to save clean up their credit, making that down payment on a home, and to a place with safer streets and better homes. these things keep people going. this is a whole different idea of what life can be like in the future. >> before we turn to the audience, this is sort of a freebie. anything i can ask any of you guys that you had really hoped to speak to? that is good. that means i kind of did my job, i guess. all right, audience. and i calling on people?
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>> in the same way we think about time in school and teachable moments we think about tax time as the tax moment. the final question that greg asked really is, how does this moment move beyond just the refund and help for the future? one of the reasons we are so excited to be more deeply part of this movement is because so many of the fight of volunteers have become adequate asset building advocates, and want to link other services to what is happening at the site, because they see the potential. i got everybody's idea, started with lori on, about, how do we leverage this moment? how should we think about the other products, other partnerships we can use as a tax
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moment. >> one of the things we started doing was, when you come into signing your name, there is not just a list of your personal information, but it also links to social services. do you need help with childcare? do you need help with training or job skills? it is a whole form that you fill out. after you are done preparing your taxes, you say, we will refer you to this organization, or refer you to that. providing an atmosphere where you have partnering organizations they are, and you kind of weed out what people want at that time, kind of helps them with other services that they may not be aware of. >> we try to do -- we have partnered with various organizations in virginia for credit counseling. so we will have someone at our
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site. somebody can, either while they are waiting -- the interminable wait to get their return done, or after it is done, they can meet with a credit counselor look up their credit score. many of these people, they want to be able to buy a car or a house or whatever. we have tried to marriott with a bunch of things. what credit counseling works really well. we work in a human services office, so we are able to refer pretty easily. but that is something that works really nicely. >> fantastic outreach team -- a couple of them are here today. they run a campaign that helps raise awareness of the credits. and also vita opportunities. part of what they work on is doing this sort of thing looking at the opportunities including health coverage, taking up the opportunity to devote some of your income to a
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savings, split refund option. in the packet, you have a little flyer that will direct you to some information about that and all the opportunities we are trying to draw people into. >> we heard a lot about the tax moments in our interviews. i want to talk briefly about dignity and debt. it is important at the vita sites to treat clients with as much dignity as possible. you have heavy competition from h&r block and liberty taxes because they really know how to treat people as customers. they make people feel valuable. part of the reason people go to h&r block rather than a vita site is because it feels so good to be there. we need to make sure for the moment people enter the door, how the office looks, how they are treated, that this is a
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dignity-enhancing moment. because incorporation is so profoundly attached to have folks are treated when they come in the door. second, people really want to clean up their debt so they can move ahead. they do not know how to. they have fascinating and may be perverse ideas about what debt should be prioritized. we cover this in gory detail in the book. credit counseling, how they could prioritize debt, and what counts toward a credit or would be really -- credit score would be really valuable. >> considering political incorporation, to what degree do the vita sites -- is that an add-on? is that something some of the communities do? >> we do not have registration to vote at any of our sites, but it is a fabulous idea.
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>> one of our site is dedicated to providing opportunities to register voters, open up accounts. it is definitely a priority to link those services well. >> it is kind of hard for me to see the whole room. can somebody help me if i am not seeing people in the back or anything like that? thanks. >> this question is for professor eden. does any of your recent research skin insights about how we can help those low income taxpayers become more aware of free tax preparation, either in person like at the vita sites, or online like myfreetaxes.com? quick it is hard to compete with those dancing -- >> it is hard to compete with those dancing man on the corner. in boston, there has been a
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vigorous campaign. the abcd community organization is a major provider of the eitc and the vita free tax calculation. it has become institutionalized in a way that gets under your fingers. you have this powerful competition from h&r block and all of its competitors and you have the possibility of getting your refund early. if you can figure out how to make work pay all of the year, i love the idea of helping people withdraw midyear to avoid a financial cascade. we do need to think more carefully about ways to not let debt be the driver of which door you enter when those tax refunds to come available.
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>> that have been a group of organizations that have worked together to pilot and launch an online preparation service that allows people to do their taxes online for free. i wonder if you could talk about that from a supply and demand and volunteer site, but also an inclusion standpoint. the increase in online services is something we are seeing from taxpayers at all levels. >> i bank with bb&t, and a lot of folks have been asking online. folks have been really familiar with the tax codes and things you can really claim on your taxes. you may incur some hurdles and things that you could have received that you were not aware of. it is just being familiar, being well versed in the tax preparation. it is free, but are you really
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getting everything that you could? >> to that point, we have tried at various times, community tax aid, to have -- our biggest site, self-directed tax return prep. both have people there to sort of felt the taxpayers, ask questions. they do the returns themselves but they can ask the questions. what i would say this is the very population you really do not want to necessarily make do-it-yourself online tax return preparation available to, because it is -- it's hard. there are lots of things that are very subtle and turn on understanding what certain terms mean. the have a very specific meaning in the tax code that is different from its colloquial meaning. and so i am of two minds. i struggle with that as a return prep service provider. we are trying out doing something where they can do suffer directed and we can kind
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of supervise how they do the return, and we will see how that goes. but i do have concerns about the fact that they do not end up getting the maximum benefit out of that approach. >> right here. >> from the financial freedom foundation, based on turbotax. i wanted to follow up, followed by the eitc nerd. a couple of thoughts. one of the things you mentioned was that anybody can buy turbotax and go out and do it. interested in the whole tax fraud issue -- yesterday, there was a forum sponsored by the atlantic, and intuit was one of the underwriters. our ceo was one of the opening speakers. his point of view was, for all of us that are in this tax fraud battle, to make sure we do not
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put the solutions on the back of the lowest income. that is not right. that is not going to get us out of this problem. i do encourage everyone to go online and look at the discussion. there are some really good discussions there. there are senators talking about it as well. there was talk about hope and about this being a hopeful time. doing turbotax through the free file, where we have had some of the best success is by partnering with vita on that, providing coaches. if anyone is interested in using intuit's product, we would be happy to help. my emotion is coming out. for anybody who is eligible for our products, you can do those
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free. that is a new development, and we would be happy to work with anybody. free file is not about into it. it is about different software companies that can help work with that. have you looked at the self prep in the same way? my favorite story is from harlem, when we had a taxpayer using turbotax, and our coach saw this guy getting angrier and angrier as he was doing it. he said, sir don't do this. he said, i have had somebody else do my taxes for 20 years. is this all there is to it? >> that is fair. people are afraid to do their own taxes. the idea that you could get
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audited, that you could own money, that you could break the law -- it is very intimidating to people. a lot of the reason why they go to the for-profit tax preparers -- they trust them to get it right, which makes the story all the more tragic. we need to make sure that those folks are regulated. they're are getting paid quite well for those services. fear is very much a factor. a lot of our folks self filed as well. what we saw is that a lot of folks went to the one person in their network who had mastered turbotax, and they are paying $30 to that person to help them through the process. this informal coaching is going on. we might as well capitalize on it by coaching the coaches.
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having returned from the mississippi delta, people are offering into it and other products to their neighbors, and engaging in some of the practices that barbara is talking about. the opportunity for explication here is really, really ripe, vulnerable populations. we need to be alert to it, and we need to coach the coaches. >> gentleman in the red tie. >> this is a question for dr. eden. in interviewing everyone for your book, did you get any sense that folks understood where they were in terms of the phase in or phase out range? there was a sense i had much lower credit than i had the year before. did you get a sense of that, and the desire to marry or not be
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married? >> we devoted considerable time to asking people these questions. it was very interesting. there is quite a moral discourse about this. first of all, people do not know how it works. they know it is attached to work . they know you have to have kids to get it. they know that the more you work, the more you get. people do not think, i should work less, because maybe i will get the phaseout range. the people at the sweet spot of the credit generally benefit from working more. they see it as a motivation to work more hours and not less. they do not know how much they are going to get every year. they have a sense of what it might be. they are multiyear claimants. the surprise kind of cautions them against pre-spending. i think that is a good thing. when christmas comes and there are all these pressures to buy
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you are still going to maybe figure out a way to get what your kids need, but you are not going to be as susceptible to temptations to spend, as you are not really sure. that increases the sense that this is a windfall, a gift from god, as one person said it. better than christmas. it was all over our interviews. walmart is now using that line. come in for an experience that is better than christmas. the sense of surprise built and anticipation and a sense of joy around the event of collecting your tax refund that most of us don't have. that is a nice moment for families a celebratory moment for families. they do understand some things. on balance, i think they understand the right things. you need to have children, and the more you are in, the more you get. >> to the extent that they are
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now on the downward slope sometimes they are surprised in not a good way. you will say, you are getting $3000, and they will say, what you mean? last year, i got $4000. when you point out that the total amount of money they have in their household is more, because you got that better job and so you earned 3000 more dollars, it really does not matter to them whether they have gotten the credit or not. they get that. they get that idea that it is better for them to be able to earn more. none of them have the thing they can yell, i'm going to go on the -- they do not have that idea. they understand that if they earn more, it is appropriate that people who are earning less should be helped the way they
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were helped when they were earning less. >> you talked about the opportunities for explication. the problems with identity stuff -- i know at many vita sites one of the biggest challenges we have are when parents are not together, and who files first. i know our fight to team works hard to help people with an injured spouse situation. perhaps barbara you might want to speak about how the vita sites help people right themselves from identity theft. >> in terms of identity theft we cannot really help with that other than if you have had your identity stolen you can go to the -- the irs will assign you a special filing number, and we have had clients come in with those so they can file.
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the more valuable service that we provide for our clients is the dueling parental attempt to file the child's situation where we are able to help the custodial parent who is all worried about having to get this filed because the other parent they know, is going to file the child. we have had situations where we have had to sit down with them back in the days, and have walk-in centers. we would say, bring in your paperwork. you can prove this child lives with you, but you have to do that. that is another valuable thing we can give that if you are not in the vital world, you might not get. >> i think we have time for one or two more questions. right there. >> this is a question i would like to direct -- on the question of research about vita sites having a higher accuracy
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rate than others, was that others who were certified or others in the private sector, or individuals? if you could just expand on that please. >> the sector report looks at various different types of preparers. the vita sites had the highest accuracy rate overall. the lowest accuracy rate overall , the highest error rate, was for an enrolled preparers that were not associated with some of the national chains. there was a special term for those. i cannot remember off the top of my head. those are the types we are thinking about when you think of somebody who hung out their shingle, got a coffee, and has not gone through any internal certification some of the bigger chains might have. we can follow up.
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>> gentlemen, right here? >> i am with the any casey foundation. a great event. thank you all. so many things traveling around in my brain right now. i get really excited about tax time and this other good stuff. for me, one other thing that has come out of this is thinking about the importance of fighter how paid preparers, and some of the fraudulent think you have talked about. one thing is the fee for service model in helping the consumers prospective vita clients helping them understand how much it is really going to cost them, and seeing that the cost is taking away from their overall family budget. have any of you thought about showcasing the vita costs that they have, which is zero for your clients, versus what your
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competitors are charging? and then secondly, in regards to the research, if there is anything you could lift up in regards to if you saw any change in behavior as far as vita clients versus others who understood that they were getting the full refund. >> the issue of being able to point out to them that walking out the door with your refund means you are walking out with $400 less than you would be walking out with a week from now -- that is something we try always to get that message across. what it is sometimes difficult, because they might very well need that money right that night because they need to go pay their payday loans. so it is a very challenging situation for us to be able to make that value proposition when they are really up against it.
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what we do is, we tried to get out and start doing returns as early as we possibly can when they have direct deposit. they can get it in sometimes a week or less. it is a challenging thing. i try to figure out how to help migrate more people to vita sites, but we need to have the vita sites to migrate to. >> a good benefit of that is the flexible hours. you can come after work. that is an incentive to work around the schedules of someone who may have multiple jobs. another incentive is direct deposit. so it may not be automatic on a debit card. you can get it in 72 hours. you can buy savings bonds. there are definitely incentives of getting the taxes prepared at the vita sites.
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i think we do a really good job of advertising those benefits. we do an annual report after each session to show how much money was the average return and things of that nature, to really show the benefits of that program. >> it is completely true that when you get a check from h&r block, what you paid h&r block is invisible to you. you know the little plaque they have in the office is uninterpretable. you cannot figure out what your fee will actually be. a great role for the vita sites would be to make the invisible visible, to advertise with great vigor the savings that you can get from a vita. but you do have to confront the fear of the irs. people often say, i go to h&r block because i have peace of mind, this audit protection
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feature that some of these tax preparers offer. that is very valuable to people because they are so afraid of getting in trouble with the law. third, what the vita sites can do that for-profit taxpayers cannot do is, they can marry tax-preparation with other services. the vita site becomes a place where you can figure out which debt to prioritize. it becomes the place where you are treated with just as much dignity as you are treated at the h&r block. then, you can compete in ways that clearly make it beneficial to go to the vita site rather than a for-profit. >> i think that is about our time. i want to thank our great panel. [applause] i also want to thank our host for working families for your great work.
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thank all of you for coming. i hope you have a really strong sense of how fantastic the eitc, ctc, vita -- how fantastic they are, how they need to be protected and strengthened. there is need for bipartisan effort on this. i think everybody would love to see some bipartisan effort. so thank you for coming. [applause] >> on capitol hill today president obama's $4 trillion budget has been submitted to congress. all chambers already releasing their reaction. the house gavels in in about 16 minutes, at noon eastern time. they will start the day with speeches. legislative work begins at 5:00. they are considering a homeland security social media plan for national these, and any boats in the house will be held after 6:30. tomorrow, the house seeking to
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repeal the 2010 health care law. the senate is in at 4:00 eastern, working to prevent suicides among military veterans, and tomorrow, the homeland security bill. the house rules committee will be marking of the bill to repeal the federal health care law signed by president obama nearly five years ago. it would require lawmakers come up with an alternative to the existing law. you can watch the rules committee live at 5:00 eastern on c-span 3. >> the political landscape has changed with the 114 congress. not only are there 43 newer publicans and 53 new democrats in the house, and 12 new republicans and one new democrat in the senate, there are 108 women in congress, including the first african-american female republican in the house, and the first woman veteran in the senate. the congressional chronicle page has less of useful information including voting and statistics
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on congress. best access. >> president obama's 2016 budget has been released to congress. we already heard remarks by the president. before the house gavels in, we will take an in-depth look at his proposal, including the increases in domestic and military spending that would go over the sequestration spending cap. host: august and tom rice is a republican from south carolina and was on the budget committee. we know the baseline numbers, and that they can include sequestration. what is your reaction to that? is sequestration a good thing?
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guest: absolutely not. sequestration is not a good thing. what we need to do is agree on more intelligent ways to cut spending, rather than just across the board. given that they were unable to do that in 2010, sequestration was the way it had to be done. we are already currently spending greater than the historical average for the government. spending is the problem. it is not revenue. we are running $400 billion plus deficit. that is way down from a couple of years ago. we need to do more to curtail spending. we need to get the size of government back under control. host: $474 billion is the projected deficit. the $4 trillion budget hits capitol hill today. what is the smarter way to spend?
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guest: i like the pathway to prosperity that the house committee has put out for the last three years. that would balance in 10 years. the way it does that is it would repeal obama care and save $2.1 trillion. it would provide premium support for medicare. as you know, it is projected to run out of money around 2030. it would also, not a silly cut discretionary, but slow the growth of discretionary. we have already cut out, back to 2007 or 2008 levels. it is projected that it will be historical low levels.
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spending in defense is increase, based on the needs of the pentagon right about $400 billion. we're talking to congressman tom rice, a member of the budget committee. if you want to call in, you can call (202) 748-8001 for republicans. (202) 748-8000 for democrats. (202) 745-8002 for independents. if you are outside the united states, (202) 748-0003. congress may, what happens in the budget committee when the president's budget arrives on capitol hill? guest: there will be celebration. not because of the content of the budget, that the fact that we get the budget on time since the president has been in office. there is a process that we go through to do the budget. it is due on february 1.
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in the past, it has not been delivered before april. then, the house presents is budget. that has not happen in -- since the president has been in office. that is fascinating to me. so may think that we do there so nonsensical in washington, you can hardly run a bakery or your household without a budget. yet, here we are trying to run the most complex nation in the world, and we have not had and agreed to budget since the president has been in office. host them the term debt on arrival has been thrown around. guest: certainly, not every term in the budget will be agreed to. i think there probably areas that -- where we can find common
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ground the house will put something out very similar to what it has put up in past years. we are confident that the house and senate will go to conference. that is something that -- if it is something that the president agrees to down the line, i doubt it. hopefully we will work together. host: there will be separate house and senate budgets this trimaran around? guest: there is a process for that. that is how it is. and. reconciliation. it requires 51 votes. host: but it's not something that has happened in recent years? guest: right. when harry reid was head of the senate they did not want to take up a budget. anything that republicans had to bow on, it might h hurt them in an election. last year, we passed no budget no pay.
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we never did negotiation process, and i was very disappointed by that. i suspect that this year we. i think on this will put forward a unified budget and the president will have to decide whether or not he will tour or trying work on it. host: tom rice represent south carolina seven district. here to take your calls and questions is the congressman. tim is in clearwater, florida. you are up for us. caller: good morning. i was a ron paul supporter and i am basically the -- in the conservative wing of the republicans. we are overthrowing democratically elected governments like in the ukraine.
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i understand that we are in venezuela now. just minor own business? you tell as we are broke and bankrupt you are damaging my children's future. who do you think you are with all this militarism. guest: one of the main reasons iran for congress was to get our debt under control. i think everybody from the white house to the congress will tell you that we have to do something to rein it in. we have $18 trillion in debt and climbing. right now, our debt held by the public is at a somewhat dangerous level, 70% of gdp. it is predicted that that will go to 100% of gdp within the next 20 years if we do not do something to rein it in. the house budget committee does exactly that. our budget will balance within 10 years. it is a gradual process.
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we are spending, i don't know 20% more than what we are taking in right now. we will start paying down the debt. if we can simply make progress, put our budget on the right trajectory, and i think you will see a great weight lifted off of our economy. people will be more interested in investing in the united states. host: the u.s. debt clock website has a running tally of our national debt. $18 trillion. you can see that there as well as some of the breakdowns that they do. deborah is waiting in virginia. good morning, deborah. caller: good morning. my question is this -- people are out here working so hard. i work 84 hours per week. the minimum wage is getting to
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the point where no one -- you know, republicans say they want to increase it. i am wondering how you could think that a single mother can live off of the money there is now. you make so much money there but it is killing the lower class and me, i am middle-class. the amount of money that put in taxes is insane. being single with no dependents, i really pay. guest: my response is that the best way to get the wage base is to go our economy. the president is very fond of saying that i am for the middle class, and his proposal for this budget this year has middle-class in the title. the fact is that if you look at the average household income since the president has been in office, it is down about 9%. at the same time, expenses have
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expanded greatly. the middle class is getting squeezed. here, we have this middle-class squeeze from over the past six years. health care costs are. fuel costs are out. they are down somewhat, but they are overall higher than they are since the president took office. i understand, and i agree that the middle-class is getting squeezed. we need to do everything we can to grow our economy and bring that middle-class family income back up. i have a bill that will be interesting in the next few weeks to do just that. i want to get government bureaucrats, i want to have them have skin in the game. i'm working on a bill to do that.
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i think big government is a part of that problem. the problem with an across-the-board minimum wage like that is that they divided by what is a living wage. i can tell you that a living wage in san francisco is dramatically different than a wage in south carolina. i prefer that states that what that minimum wage should be. i have no problem with state setting a minimum wage. i know that large number of states improved an increase in their states. well i struggle with is applying the same minimum wage in california to north carolina or louisiana. or south carolina, where i am from. i do not think that makes sense. host: on this proposal that is expected to be in the budget, 1.3% pay raise for federal
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employees and uniformed members of the military. what do you think? guest: i would certainly stand behind the uniform members of the military. one point where struggle is that in so many ways the federal bureaucracy is dragging our economy. when you look at these extensions of the clean water rules, these new rules on banks. all of these regulatory extensions hurt smaller business. that is where jobs come from. the new rules under obamacare are a big drag on small business. these huge regulatory measures are a drag on our economy. while like to see is bureaucrats -- if they are action slow our economy and slow hirings, and cost the middle-class wages then they should suffer the consequences to. the median household income has
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declined since 2007. yet, federal employees make more than a day in 2007. they do not share the same consequences that perhaps they should. guest: we have another caller waiting to speak with you. caller: i could save us some money right off the. i have gotten 13 medicare books and that is a waste of money. if they would rage early retirement from 62 to >> we are going to leave washington journal as the house devils and. three bills including one calling for a homeland security social media plan in times of national emergencies. and he requested votes will be held after 6:30 eastern. tomorrow, members will seek to repeal the 2010 health care law.
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[captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.] the speaker pro tempore: the house will be in order. the chair lays before the house a communication from the speaker. the clerk: the speaker's rooms, washington, d.c. february 2, 2015. i hereby appoint the honorable tom emmer to act as speaker pro tempore on this day, signed, john a. boehner, speaker of the house of representatives. the speaker pro tempore: pursuant to the order of the house
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