Johnette Hartnett, Ed.D
National Disability Institute

The National Disability Institute (NDI) and NCB Capital Impact along with its national partners, the IRS Stakeholder Partnership, Education Communication Division (SPEC); the U.S. Department of Health and Human Services, Office on Disability, and the Law, Health Policy and Disability Center, University of Iowa College of Law introduced the TAXfacts+ Campaign on April 15, 2004 in Washington, DC as a gateway strategy to asset building for working Americans with disabilities. The Campaign's short-term goal is to increase the knowledge and awareness of tax and financial services for working Americans and their families through participation in community-based free tax preparation. Its long-term goal is to increase the economic independence and income preservation of working Americans and their families with disabilities through participation in asset building activities beyond free tax preparation that are tailored and effective in building real economic impact.

The road to equality of economic rights for people with different abilities regardless of race creed or socioeconomic background needs to be paved with more than good intentions or public policy that penalizes asset ownership. The road to equality of economic rights in the 21st century must be paved with public policy that recognizes the intrinsic human value of citizens with disabilities and provides for their full inclusion in its formal economyⁱ.

Educating Democracy is a response to the national movement focused on building savings and increasing wealth for low-income working Americans introduced in the 1990sⁱⁱ. Where there is poverty, people of color, unemployment, under employment and lack of knowledge about tax and financial services there is disability. Twenty-six percent of 20 million working Americans with a severe disability are living in poverty compared to 9 percent of low-income workers without disabilities. Although disability advocacy groups led the way for civil rights legislation, independent living, integrated education, and the American with Disabilities Act, entrance into the formal economy has not occurred for millions of Americans with disabilities. Asset accumulation and tax policy for individuals with disabilities was not part of the new asset building frontier for low-income Americans because the concept and potential of work for individuals with a disability was and is not fully realized.

Many of the national free tax prep and asset building initiatives have focused on immigrants, Native Americans, English as a second language, low-income populations. Recently, the impact of race and ethnicity on implementing asset building strategies has been raised and emerging best practices from a number of grassroots programs suggest that existing asset building strategies to do not work well within highly diverse culturesⁱⁱⁱ. However, few national programs have addressed the needs of the customer with a disability. Educating Democracy dispels the myth that disability is a separate and distinct population of its own, but rather it is an integral part of all these populations but comes with its own set of "cultural competencies" additional "gateway costs" and policy challenges if on public benefits^{iv v}.

Disability and its role in the mainstream economy despite the efforts of the Americans with Disabilities Act in 1990 are still not considered a "natural part of human existence." The potential of a fully integrated workforce with individuals with disabilities is not fully understood by policymakers or private sector business. Over 23 Federal agencies provide resources for over 200 disability programs at cost of over $200 billion a year yet the messaging about disability as a viable market segment in the 21st century economy has not been made. The facts are hard to ignore - one in five Americans have a disability; one in four American families have a member with a disability; and 42% of the 20 million working Americans with disabilities have a severe disability (which mean they need assistance with more than one activity of daily living like dressing, bathing, eating or toileting). The aging demographics predict a rise in seniors with disabilities over the next generation as well as the continued growth of disability in the under 65 year old population.

This research of tax filers with disabilities is part of the evolutionary journey of disability in the United States and represents the pioneering spirit and rightful claiming of working Americans with disability to the "principles of democratic life." In 2005 filing season, the TAXfacts+ Campaign reached 11 cities and assisted 5,211 individuals with disabilities file tax returns. The primary focus in the first year was building trusted community-based partnerships between the local disability organizations and free tax filing coalitions. In the 2006 filing season the Campaign reached 30 cities and assisted 17,233 tax filers with disabilities; engaged 192 local disability partners in building workgroups within existing free tax coalitions; identified 20 free tax preparation sites focused exclusively on serving persons with disabilities; and reported 1,160 free tax preparation sites accessible to persons with disabilities.

In January of 2006 a grant from the Ford Foundation and NCB (formerly the National Cooperative Bank) provided NDI with the opportunity to study the tax filing and financial service needs of a sample of working individuals with disabilities eligible for the Earned Income Tax Credit (EITC) in four of the 30 TAXfacts+ cities. Pilots were established in Wichita, Kansas, New York City, West Palm Beach, Florida and Boston, Massachusetts with site selection based in part on the cities' previous participation and success in building effective disability workgroups within existing free tax coalitions.

The core research question for the four city pilot asked who are customers with disabilities utilizing free tax filing and financial services and what are their needs? The core research method was qualitative and exploratory and used surveys, focus groups and document review for data collection. Three different surveys were designed and 3,901 taxpayers with disabilities responded. The three surveys were targeted at participants with disabilities across the four pilot cities. Survey #1 the Walk-In Survey represents responses from 3,199 taxpayers with disabilities who walked into a free tax site and filled out a seven question survey; Survey #2 the Non-Walk-In survey represents responses from 649 taxpayers with disabilities who were contacted through a local participating disability organization and asked to fill-out a 26 question survey; and Survey #3 the Focus Group survey represents responses from participants who attended a two hour focus group and filled out a 27 question survey in each of four cities (N=83)^vi.

The goals of the four city pilot research expanded on the original goals of the TAXfacts+ Campaign: to increase public and private understanding of the financial services and tax filing needs of working individuals and their with disabilities; to increase the number of free tax filers with disabilities receiving the EITC; to identify access and accommodation solutions that increase asset building participation of individuals and families; and provide outreach and education to lead disability workgroups.

The core findings are qualitative and based on descriptive statistics and represent the voices of thousands of participants with disabilities. The findings and recommendations reflect actions suggested by participants with disabilities to increase their access and participation in the formal U. S. economy. However, summary observations are not statistically validated and are difficult to project to the general population of low-income taxpayers with disabilities due to the instrument design and data collection methods. Although the sample size is large, increasing the accuracy, validity, and reliability of the overall observations, further research is recommended to confirm and validate the data reported in this report.

Recommendations

Sixteen years after the passage of the Americans with Disabilities Act (ADA), there is growing interest by policymakers, human service professionals, and individuals with disabilities and their families to design a roadmap that encourages participation in the economic mainstream through work, income preservation and asset building. The financial portrait revealed by survey and focus group participants in the 2006 TAXfacts+ Campaign sets a framework for action for government, business leaders, and faith and community-based organizations.

Human and financial assets define the capacities and resources that enable individuals to have expanded choices in daily activities that enhance the quality of life experience. For persons with disabilities, economic empowerment will impact social status and community participation. For financial institutions, the research findings, while only a glimpse of a market sector, set the stage for outreach and customized services to be tested, refined, and expanded as purchasing power and financial needs of consumers with disabilities grow. For policymakers at all levels of government, this report is a wake up call for policy reform that reduces barriers to economic advancement and build incentives that encourages income and asset development.

Recommendations for action have been divided into four major areas: research, public education, policy development, and capacity building.

1. Research
   The findings from this research provide only a first empirical snapshot of the tax and financial habits and aspirations of working age Americans with disabilities and their families. A research focus across multiple federal agencies and private Foundations would help us to learn more about this target population of adults with disabilities regarding access and use of favorable tax benefits, money management, savings and asset building strategies. Policy barriers and facilitators to income preservation and asset development must be identified and interventions designed and tested to produce evidence-based outcomes with external validity. We must learn more about:
   
   • access and use of the Earned Income Tax Credit by tax filers with disabilities and their demographic profile (race, ethnicity, gender, age, income level, education level, type of disability, employment status);
   • impact of financial education on money management and savings behavior; and
   • impact of various intervention strategies including but not limited to access to transportation and technology, self-directed individual budgets composed of braided public resources, and expansion of traditional savings accounts (529 plans, IDAs, and IRAs) to produce a better economic future.
     
2. Policy Development
   No single federal agency can design and implement a roadmap out of poverty for the target population. Means tested entitlement programs (Social Security and Medicaid) must be reevaluated to raise or waive extremely low income and asset limits for continued eligibility for public benefits. All disability-related public policy must consistently encourage work, savings, and asset building as valued results.
   
   By Executive Order, an Asset Building Work Group led by the IRS and Treasury and including representatives of each major department (Health and Human Services, Education, Labor, Housing and Urban Development, Commerce, Transportation, Agriculture, and the Social Security Administration) shall review and develop in six months a list of policy options to advance a federal coordinated effort with incentives for private sector participation that will support income preservation and asset building for Americans with disabilities and their families.
   
   Through regulatory change, provide all students with disabilities access to financial education in grades K-12 as part of individual education plans (IEPs). Changing expectations of individuals with disabilities regarding the possibilities of saving and asset building must begin at an early age. The growing movement to bring age-appropriate financial education into the schools should not leave behind students with disabilities.
   
3. Public Education
   The research findings support a multifaceted comprehensive strategy that targets financial service professionals, educators, community and business leaders as well as individuals with disabilities their families and employers. Specific recommendations include:
   
   • Develop a research-based curriculum for K-12 introducing young people with disabilities to the American tax system, and the importance and impact of saving and asset building behavior that starts early.
   • Develop alternative disability tax publications that are targeted for people with cognitive and developmental disabilities.
   • Provide curricula for enrolled preparers on tax provisions for taxpayers with disabilities who itemize.
   • Encourage state and local asset development summits to bring together financial institutions, government agencies, and community-based organizations to coordinate outreach and marketing that brings persons with disabilities into the economic mainstream.
   • Develop a 800 or 211 number that provides specific information about tax filing for individuals with disabilities.
   • Create "disability tax folders" that provide low-income filers with disabilities with an easy system for scanning receipts and other important documents into a virtual file system in preparation for tax day.
4. Capacity Building
   In just two years, the TAXfacts+ Campaign increased the number of tax filers with disabilities by 330 percent. To achieve real economic impact, the public-private partnerships formed at a community level need technical assistance and resources to reach the target population, provide accommodations if appropriate, and connect to other asset building strategies. Recommendations to build the capacity of community partnership include:
   
   • Create a national disability tax aide program modeled after the AARP program for seniors to expand support to low-income wage earners with disabilities.
   • Develop "Disability Saves" accounts modeled after the America Saves national program.
   • Continue to expand the IRS SPEC Division outreach and focused technical assistance to reach and support the target population in the top 100 markets. Increase coordination among federal agency field office staff to build and support income preservation and asset building models through the workforce development system, public schools, Social Security benefits counselors, and financial institution consumer education programs.
   • Design and test new financial product and service models to meet the needs of the target population with engagement of the Federal Reserve, the FDIC, the Treasury and regulated financial institutions

This is a short synopsis of the full-length paper. Please go to to read the full report and for more information on this season's Real Economic Impact Tour.

1 Seto, T.P. & Buhai, S.L. (2006). Tax and Disability: Ability to Pay and the Taxation of Difference. University of Pennsylvania Law Review. 154 U. Pa. L. Rev. 1053.

2 Sherraden, M. (1992). Asset for the Poor. Washington University.

3 Watson, O. (2006). The Culture of Money. The Impact of Race, Ethnicity, and Color on the implementation of Asset-building Strategies. Prepared for the Annie E. Casey Foundation.

4 Mendelsoh, S. (2006). Role of the Tax Code in Asset Development for People with Disabilities. Disability Studies quarterly, V. 26, No.1. www.dsq-sds.org.

5 She, P. & Livermore, G.A. (2006). Material Hardship, Poverty, and Disability among Working-Age Adults. Research Brief. Rehabilitation Research and Training Center for Economic Research on Employment Policy for Persons with Disabilities. Cornell University.

6 All survey documents are available at www.NDI.Inc.org.

i This is a short synopsis of the full-length paper. Please go to http://www.ndi-inc.org/ to read the full report and for more information on this season’s Real Economic Impact Tour.

ii Dr. Hartnett is the Director of Research and Strategic Partnership Development for the National Disability Institute (NDI). She is also a senior researcher with the Law, Health Policy, & disability Center (LHPDC) at the University of Iowa, College of Law. Dr. Hartnett provides national leadership in the development of traditional and non-traditional partnerships across Federal agencies, foundations, and the private and non-profit sector on a variety of public policy issues relative to the employment, asset development, and housing and long-term service and support needs of Americans with disabilities.