[Congressional Record Volume 140, Number 127 (Tuesday, September 13, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 13, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 REWARD WORK, NOT WELFARE, FOR LOW-INCOME FAMILIES, SUPPORT THE EARNED 
                     INCOME CREDIT EASY FILING ACT

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                           HON. SAM GEJDENSON

                             of connecticut

                    in the house of representatives

                      Tuesday, September 13, 1994

  Mr. GEJDENSON. Mr. Speaker, today I am announcing an initiative to 
help working families and to encourage welfare recipients to enter the 
work force. As many people already know, the earned income credit is a 
work incentive and supplement for low-income wage earners.
  But for the credit to work as effectively as possible, we need to 
make sure that those who are eligible have a full understanding of its 
benefits, and are able to receive the credit with minimal assistance. 
Many people who are eligible for the earned income credit are those who 
work in part-time, temporary, low-wage jobs. They may collect welfare 
benefits for a few months between jobs which are seasonal or temporary 
in nature. These workers, who have the hardest time staying off 
welfare, but who work whenever they can, are also the least likely to 
file for the credit.
  But too often, those who are trying to work their way off welfare 
lose a substantial portion of their well-deserved tax credit to high 
commercial tax preparation fees and exorbitant interest rates charged 
for instant refunds. A typical earned income credit filer is charged 
$70 to $100 to prepare very simple paperwork and obtain an instant 
refund. The earned income tax credit is meant to go into the pockets of 
low-income workers, not tax preparation firms.
  The fee for an instant refund is actually a very high interest rate 
loan. Instant refund fees range from $25 to $39. If a taxpayer pays $25 
for an instant $2,000 refund, which would have arrived in 2 weeks, the 
effective annual interest rate is 32.5 percent. The same fee for an 
instant $1,000 refund would represent a 65 percent interest rate.
  Today I am introducing the Earned Income Credit Easy Filing Act, a 
bill to help working people who are trying to stay off welfare get the 
full benefit of the credit to which they are entitled. I urge my 
colleagues to support this legislation.
  First, the bill would require the Treasury Secretary to recruit 
outreach counselors from the local community to help low-income wage 
earners understand the credit and to assist them in preparing their own 
returns. Second, the bill would require the Treasury to promote its 
free tax clinics more effectively through means appropriate to reach 
the low-income community. Third, the bill would direct the Treasury to 
expand existing electronic filing pilot programs to increase the number 
of nonprofit social service entities which participate in electronic 
filing.
  I wish to thank Dr. Lynn M. Olson of the American Academy of 
Pediatrics for her valuable research, which provided the foundation for 
the development of this legislation, and Ms. Kate Jesberg Gonzalez of 
the Washington, DC, Department of Income Maintenance, for bringing Dr. 
Olson's research to my attention.

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