Question

Two page paper on the article " Refund to Savings 2015–2016: Field Experiments to Promote Tax-Time Saving in Low- and Moderate-Income Households" by Stephen P. Roll, Genevieve Davison, Michal Grinstein-Weiss, Mathieu R. Despard, and Sam Bufe

Rubric:

1. Section 1 – Article Description

2. Section 2- Opinion on the article

3. Section 3: Propose a policy amendment, a new policy, or the removal of an old policy.

Answer 1

1. Section 1 - Article Description

The Federal Cash Assitance Programe of Earned Income Tax Credit (EITC) recently gained momentum in order to equalize the balance between the Capitalist Investment and the National Savings of the each individual. The Recession of 2008 has taught a good lesson for the Government to frame the Tax policy in such a way that Equitable Distribution of Wealth and the Income should be adopted in the Optimaly Way. In 2015-16. The Scheme of Refunding the Amount of the Taxes (Federal Tax Act) was implemented the concept of Refund to Savings (R2S). R2S Scheme benefitted the Tax payers. The Low and Middle Income Group (LMI) Tax filers were very crucially utilized the Turbo Tax Freedom Edition (TTFE)- free tax filing platform in order to get the amount paid in the form of Taxes. Many LMI Tax filers used TTFE fiiling platform optimaly by managing the needs of basic consumption and materials needs. Nearly 43% of the Taxes was refunded and converted into the Pocket of LMI Households as Savings.  

2. Section 2 - Opinion on the aritcle

The Article was merely propagates the idea of accumulating the Savings in Low-income group and thus tells the clear picture of increasing rate of Purchaing Power Parity (PPP). The PPP will in turn increase the Demand for the Goods and Service in the Economy. The Article shows the effects of Time-Saving strategy along with the Tax Savings method. Compared to previous year, R2S gained 29,536 additional savers with the addtion of $48 million deposit of savings are accumulated in Savings Vehicle. The depicted facts flashes the view of indicating the very high of Velocity so that 680,545 Tax Payers paid the Tax (with getting Savings Privilege) through TTFE online-mode of Transanction. Another progress was estimated by the way of Nominal GDP was calculated by rating PPP of the LMI Household income people. This Article suggests the idea that the increase in Savings will lead to increase in the GDP. LMI Household income people can also able to buy the Goods and Services at the time they required. It also disqualifies the stage of inequality among Rich Household people and the Low Income People.      

3. Section 3: Propose a policy amendment, a new policy, or the removal of an old policy.

The US Economy is the developed Economy. In order to stabilize the inflation rate in the long-run and also to keep the standard rate of GDP as well as Balance of Payments, The Federal Reserve System of US need to spend on Nationa Building Activities like Promoting Education, Creating more Infrastructural Facilities, Earning more Export Surplus and Giving Importance and adopting the method of Innovative Techniques in the long-run. To adopt above indicated things only the minimum amount is not at all sufficient. The US Government should balance the activities of both Progressive Tax Scheme as well as  Refund to Savings Scheme (R2S) in the nominal level. If 60% of the tax resources is pooled through Progressive Tax, Not more than 40% of resources are to be pooled through R2S Scheme. Periodical Monitor Committee (PMC) set by the US in order to ensure the correct Rate of Inflation are correlated with the rate of Real GDP aligning with the Good Economic Condition. Too much Savings also lead to Disinvestment in the Capital Economy. If the PMC found any abnormal Rate of above specified Economic Situation, The Government may take the decision of decreasing the Rate of Interest and Speeding up the Borrowing Capacity of the People in the Short-run. After stabilization, Government may seek advice from the PMC for next Move. This is My Policy Amendment towards Refund to Savings Concept in 2015-2016.