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A Fragile BalanceUpside Down: The Failure of Federal Tax Policies to Support Emergency Savings

A Fragile Balance: Upside Down: The Failure of Federal Tax Policies to Support Emergency Savings [Nearly all families experience fluctuations in income, and low- and moderate-income (LMI) families appear increasingly likely to experience significant income interruptions (see Collins, this volume). Almost half of Americans are “liquid asset poor,” meaning they lack even a modest amount of accessible savings to tap into in the case of an emergency (Brooks et al. 2014). Liquid savings and long-term savings or assets are quite different forms of financial resources. Using long-term savings as liquid savings can have serious consequences. For example, withdrawals from retirement or education savings accounts often come with significant financial penalties. Likewise, borrowing against home equity can be difficult, especially in the short term. In the case of an emergency, households without accessible savings must rely on family, friends, high-cost credit, or the high costs of missing payments.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Fragile BalanceUpside Down: The Failure of Federal Tax Policies to Support Emergency Savings

Editors: Collins, J. Michael
Levin, Ezra
A Fragile Balance — Nov 3, 2015
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14 pages

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Publisher
Palgrave Macmillan US
Copyright
© Palgrave Macmillan, a division of Nature America Inc. 2015
ISBN
978-1-349-50398-8
Pages
39 –53
DOI
10.1057/9781137482372_3
Publisher site
See Chapter on Publisher Site

Abstract

[Nearly all families experience fluctuations in income, and low- and moderate-income (LMI) families appear increasingly likely to experience significant income interruptions (see Collins, this volume). Almost half of Americans are “liquid asset poor,” meaning they lack even a modest amount of accessible savings to tap into in the case of an emergency (Brooks et al. 2014). Liquid savings and long-term savings or assets are quite different forms of financial resources. Using long-term savings as liquid savings can have serious consequences. For example, withdrawals from retirement or education savings accounts often come with significant financial penalties. Likewise, borrowing against home equity can be difficult, especially in the short term. In the case of an emergency, households without accessible savings must rely on family, friends, high-cost credit, or the high costs of missing payments.]

Published: Nov 3, 2015

Keywords: Capital Gain; Investment Income; Congressional Budget Office; Liquid Saving; National Priority Project

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