This paper is about the possibility of linking the savings desires of the low-income population to two or more policy instruments: first, generous federal and state income tax provisions aimed at low-income families—The Earned Income Tax Credit (EITC); and second, a set of proposed policy instruments that subsidize savings behavior for low-income households through the tax code and other mechanisms, which we call Universal Savings Accounts-Individual Development Accounts (USA/IDAs). The EITC offers low income families a clear-cut opportunity to accumulate assets and to build positive net worth. The USA-IDA legislation hopes to build on this motivation and to assist financially and logistically to meet these goals. We call this interaction “asset-based transfer policy.”
Smeeding, T. (2000). The EITC and USA’s/IDA’s: Maybe a marriage made in heaven (CSD Working Paper No. 00-18). St. Louis, MO: Washington University, Center for Social Development.