ACORN: The Most Cost-Effective Investment the Government (and Foundations) Have Ever Made
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The Dallas Morning News reported on ACORN's campaign to expand health insurance in Texas, while dozens of papers highlighted ACORN's key role in a new national coalition of unions, consumer and religious groups to fight for universal health care.
The New Orleans Times-Picayune described ACORN's ongoing work to rebuild homes in the Lower Ninth Ward neighborhood battered by Hurricane Katrina.
The San Francisco Chronicle reported that Gov. Arnold Schwarzenegger signed a bill pushed by ACORN that will help desperate California homeowners avoid foreclosures."
Conservatives themselves reluctantly recognize ACORN's importance. In a 2006 Wall Street Journal column, Steven Malanga of the Manhattan Institute complained, "When Chicago's City Council this summer required big-box stores to pay new employees at least $10 an hour, supporters of the legislation held an impromptu celebration in the council galleries.
"The hoopla was reminiscent of another scene five years earlier in New York, when opponents of Mayor Rudy Giuliani's effort to privatize failing public schools embraced in the streets after parents rejected the idea.
"What linked these celebrations was the left-wing Association for Community Organizations for Reform Now (ACORN) which led the campaign for the legislation and against privatization."
Since the tax advice of a few ACORN employees is at the heart of the current controversy, it might be helpful to understand how and why ACORN became involved in tax assistance.
In late 2003, ACORN launched a four-city program that offered assistance to families eligible for the Earned Income Tax Credit, the nation's largest income-support program. It did so in part because the IRS estimated that some 5 million qualified families failed to claim the credit.
ACORN tax preparers were trained and credentialed in coordination with the IRS. ACORN members went door to door to inform people about free tax services and the EITC.
In a formal evaluation of the program, Fred Brooks, Robert Fisher and Daniel Russell found that it was ranked near or at the top of all free tax services in those cities. Canvassed respondents in New Orleans, for example, were five times more likely to choose free tax preparation compared to income-equivalent comparison group, saving them $200-$300 each.
ACORN's tax assistance resulted in almost $4 million in tax refunds to low-income families. The next year, ACORN expanded its EITC assistance to 51 cities and generated $19 million in total refunds.
In typical ACORN fashion, its tax-advice service led to direct action. ACORN discovered that poor people who file for the EITC often take out short-term, very-high-interest loans, called Refund Anticipation Loans to receive their money a few days or weeks sooner.
In 2003, more than 50 percent of tax preparers' customers who received an RAL also received the EITC. By some estimates, the almost 200 percent annual interest customers paid on their RALs, plus the associated administrative fees reduced the EITC refunds lower-income households received by more than $500 million.
In the 1990s, when RALs exploded, state attorneys general went after companies like H&R Block for unfair and deceptive practices.
By 2000, according to the New York Times , Block had been sued no fewer than 22 times.
But lawsuits didn't stop tax preparers, or even slow them down, because RALs were extremely profitable. In 1999, H&R block made a profit of over 50 percent on its sale of RALs. In 2004, Jackson Hewitt, the second-largest tax-preparation chain in the country, said that RALs accounted for 29 percent of the company's revenues.
In January 2004, ACORN mounted coordinated actions against H&R Block in 43 cities, accusing it of stealing from low-income communities. Within a month, H& R Block and ACORN reached an agreement: H&R Block agreed to give ACORN money to expand its EITC outreach and eliminate its RAL application fee nationwide. It also agreed to hire and train ACORN members to be tax preparers.