Congressman Joe Pitts (R, PA-16) today reintroduced the Savings for Working Families Act. The bill would establish Individual Development Accounts (IDAs) on a national level, encouraging low-income working Americans to save money for buying a home, continuing their education, or starting a small business.
"For decades, we have poured billions of tax dollars into big-government social programs. Sadly, they haven't been successful in reducing American poverty," Congressman Pitts said. "By helping them save and invest, this legislation helps low-income working Americans plan for a brighter future. Unfortunately, the average American is saving less today than at any time since the Great Depression. Individuals who take advantage of IDAs will actually save significantly more than the average American."
The Savings for Working Families Act (SFWA) promotes personal financial responsibility by providing a tax credit to financial institutions that match the savings of the working poor through Individual Development Accounts (IDAs). IDAs can be used for: 1) buying a first home; 2) receiving a post-secondary education; and 3) starting or expanding a small business. In a time of negative personal savings rates, this bill promotes savings and responsibility.
Individual savings in IDAs are matched on a one-to-one basis, up to $500 per person per year, although personal contributions into an IDA are not limited. IDAs are operated through a partnership between financial institutions and local non-profit organizations. Financial institutions offering IDAs will be reimbursed through a federal tax credit for all matching funds, up to $500 per person, per year. Those who save in IDAs receive financial planning education through these unique partnerships.