The EITC and Tax Refund Products by District

Issue Brief
June 8, 2011 Download PDF

HB 3640 would regulate tax refund products

Refunded tax dollars that could help low-income households make ends meet and spur economic activity in local communities are instead ending up in the hands of tax preparation companies that hawk tax refund products. These companies claim to offer quick tax refunds that are in fact high-interest loans or services with steep fees. Because these products often target low-income workers expecting an Earned Income Tax Credit (EITC) refund, they undermine a proven anti-poverty program.

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The EITC and Tax Refund Products By District: HB 3640 would regulate tax refund products (PDF).


Related materials:

Oregonians for Working Families a statewide coalition that advocates for improving Oregon's EITC.

Two common tax refund products are refund anticipation loans (RALs) and refund anticipation checks (RACs). A RAL is a short-term, high-interest loan advertized as a rapid tax refund. A RAC is a temporary bank account controlled by the tax preparation company into which the IRS deposits a refund check, from which the taxpayer withdraws the money — less the tax preparer’s fees — through a check or prepaid card. Sold as a way to defer the cost of tax preparation, RACs come with multiple, often undisclosed, fees.

These tax refund products siphon dollars out of EITC refunds, diminishing the program’s effectiveness. The EITC is a targeted tax credit designed to honor work, keep families together, reduce poverty and offset the payroll taxes of workers in low-paying jobs. The EITC has a history of bipartisan support in Oregon and at the federal level. Ronald Reagan praised it as “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”

In Oregon, two thirds of tax filers who applied for a RAL in 2008 were EITC recipients and 13 percent of those benefiting from the EITC applied for a RAL. About one-third of RAC applicants were EITC households, while about 16 percent of those qualifying for the EITC sought a RAC.

HB 3640 would add consumer protections to RALs and RACs. The tables below show, by state House and Senate districts, the share of Oregon’s RAL and RAC applicants in 2008 who claimed the EITC and the share of EITC recipients who requested RALs and RACs.



RALs by Oregon Senate District, 2008

House District

Representative

Total # requesting RALs

# of EITC recipients requesting RALs

% of RALs requests coming from EITC recipients

% of EITC recipients requesting RALs

1

Krieger

1,408

996

71%

16%

2

Freeman

981

691

71%

19%

3

Hicks

1,140

793

70%

15%

4

Richardson

1,100

742

67%

14%

5

Buckley

865

613

71%

12%

6

Esquivel

1,284

907

71%

18%

7

Hanna

880

627

71%

14%

8

Holvey

449

289

64%

9%

9

Roblan

1,271

879

69%

20%

10

Cowan

995

663

67%

15%

11

Barnhart

702

457

65%

12%

12

Beyer

1,170

819

70%

17%

13

Nathanson

654

436

67%

11%

14

Hoyle

978

650

66%

14%

15

Olson

1,027

713

69%

17%

16

Gelser

321

207

65%

8%

17

Sprenger

1,081

714

66%

17%

18

Gilliam

825

476

58%

13%

19

Cameron

945

636

67%

16%

20

Berger

935

640

68%

17%

21

Clem

1,401

966

69%

18%

22

Komp

1,250

834

67%

16%

23

Thompson

971

643

66%

16%

24

Weidner

928

643

69%

15%

25

Thatcher

862

572

66%

14%

26

Wingard

524

308

59%

10%

27

Read

471

280

59%

10%

28

Barker

573

330

58%

10%

29

Brewer

542

351

65%

10%

30

Lindsay

559

343

61%

9%

31

Witt

852

485

57%

13%

32

Boone

1,049

586

56%

15%

33

Greenlick

269

130

48%

5%

34

Harker

595

368

62%

10%

35

Doherty

489

303

62%

10%

36

Nolan

207

90

44%

4%

37

Parrish

370

214

58%

9%

38

Garrett

147

61

42%

4%

39

Kennemer

601

358

60%

11%

40

Hunt

737

459

62%

13%

41

Tomei

666

401

60%

10%

42

Bailey

360

196

54%

5%

43

Frederick

628

402

64%

9%

44

Kotek

1,031

689

67%

14%

45

Dembrow

636

426

67%

11%

46

Cannon

608

383

63%

9%

47

Smith, J.

1,117

793

71%

14%

48

Schaufler

1,128

760

67%

13%

49

Wand

1,079

719

67%

15%

50

Matthews

905

583

64%

14%

51

Sheehan

796

484

61%

11%

52

Johnson

563

317

56%

8%

53

Whisnant

1,151

791

69%

14%

54

Conger

833

500

60%

10%

55

McLane

938

637

68%

13%

56

Garrard

1,033

760

74%

15%

57

Smith, G.

1,066

699

66%

16%

58

Jenson

1,269

869

69%

19%

59

Huffman

1,026

685

67%

14%

60

Bentz

1,085

824

76%

18%

House District Average

839

553

66%

13%

Source: OCPP presentation of IRS data for the 2008 tax year compiled and sorted by legislative districts by the Brookings Institution.



RALs by Oregon Senate District, 2008

Senate District

Senator

Total # requesting RALs

# of EITC recipients requesting RALs

% of RALs requests coming from EITC recipients

% of EITC recipients requesting RALs

1

Kruse

2,389

1,687

71%

18%

2

Atkinson

2,240

1,536

69%

15%

3

Bates

2,149

1,520

71%

15%

4

Prozanski

1,328

915

69%

12%

5

Verger

2,266

1,542

68%

17%

6

Beyer

1,872

1,277

68%

15%

7

Edwards

1,632

1,086

67%

12%

8

Morse

1,348

921

68%

13%

9

Girod

1,907

1,190

62%

15%

10

Winters

1,879

1,276

68%

16%

11

Courtney

2,652

1,800

68%

17%

12

Boquist

1,899

1,286

68%

16%

13

George

1,386

880

64%

13%

14

Hass

1,044

610

58%

10%

15

Starr

1,100

694

63%

9%

16

Johnson

1,901

1,071

56%

14%

17

Bonamici

863

498

58%

8%

18

Burdick

696

394

57%

7%

19

Devlin

516

275

53%

7%

20

Olsen

1,337

817

61%

12%

21

Rosenbaum

1,026

597

58%

7%

22

Shields

1,658

1,090

66%

12%

23

Dingfelder

1,244

809

65%

10%

24

Monroe

2,245

1,553

69%

14%

25

Monnes Anderson

1,984

1,302

66%

14%

26

Thomsen

1,360

801

59%

10%

27

Telfer

1,985

1,292

65%

13%

28

Whitsett

1,971

1,397

71%

14%

29

Nelson

2,336

1,568

67%

17%

30

Ferrioli

2,110

1,509

71%

16%

Senate District Average

1,678

1,106

66%

13%

Source: OCPP presentation of IRS data for the 2008 tax year compiled and sorted by legislative districts by the Brookings Institution.