Recommendations

• Government at all levels—federal, state, and local, should pay attention to assets—not just the incomes—of poor families.
• Policymakers should act now to improve their states’ current package of public policies with regard to asset accumulation and protection for low-income people.
• States must improve the transparency of their budgets to enable a more complete analysis of asset development policy.

Government at all levels—federal, state, and local, should pay attention to assets—not just the incomes—of poor families.

This study has demonstrated that asset poverty and inequity matter. Unfortunately, the data on assets at the state level is virtually nonexistent. The federal government should take an active lead in developing and collecting data on an asset-based poverty level that will provide regular updates on the number and percentage of families that are asset poor—nationwide and in each state. Moreover, states and the federal government should collaborate to collect and make available state-level estimates on a number of important asset indicators, including retirement savings and asset accumulation and distribution among different minority populations.

Policymakers should act now to improve their state’s current package of public policies with regard to asset accumulation and protection for low-income people.

Clearly, no state has yet to find the right combination, scope, or scale of public policies to eliminate asset poverty. The 38 policy measures evaluated in this Report Card offer a good starting point about which policies to consider. In addition to enacting policies listed in the Report Card, however, current law and regulation should be reviewed to ensure that existing barriers to asset accumulation by low-income people are eliminated.

Given scarce time and resources, policymakers may choose to begin with a small list of activities. If so, three areas deserve particular attention:

• Large-Scale IDA Initiatives. IDAs have proven effective. By providing savings matches and financial education to help low-income people purchase homes, start businesses, or finance education, more than 10,000 Americans are working and saving to change their long term economic futures. Nationwide, it is estimated that more than 65 million people could benefit from this innovative asset-building strategy.
• Asset-Protection Measures. Emerging public policies must balance the importance of both income and assets to meaningfully address issues associated with poverty and self-sufficiency. However, strides forward can be seriously eroded by unscrupulous marketers and bad luck if certain protections are not in place for asset owners. Such measures include access to reasonable health coverage, unemployment insurance, and protection from predatory lending practices.
• Tax Expenditure and Incidence Reporting. Subsidies for the accumulation and protection of assets appear only rarely in discrete, appropriated budget line items. As with the federal model, many state asset subsidies are delivered via the tax code. The beginning of developing more equitable policies is to know where this huge, annual investment in tax subsidies is going. Then, thoughtful consideration can be given to the productivity and fairness of the current expenditure.

States must improve the transparency of their budgets to enable a more complete analysis of asset development policy.

Beyond a lack of data on assets, developing a complete picture of state policy related to asset development is complicated because states, just like the federal government, subsidize asset building and protection via direct expenditures and tax-based subsidies. Tracking direct spending at the state level is no problem, but trying to measure so called “tax expenditures” is a whole different ballgame. Only about two-thirds of the states prepare any kind of itemize the full list of tax expenditures and to estimate the amount of revenue foregone through these tax expenditures. Moreover, only eight states have developed a multi-tax “economic incidence” model that can determine the distribution of the benefits of various tax expenditures by income level.