AMERICANS can't save. And recent research confirms the extent of our pecuniary predicament. Apparently, Americans rank saving money right up there with, oh, dental surgery or cleaning out the closet. Our national savings rate has dipped below zero percent and stayed there for more than a year. The last time this happened was during the Great Depression.

When it comes to saving money, most Americans need someone to save them from themselves — or from the new iPod, as the case may be. That's why so many Americans have their employers directly deduct money from their regular paycheck and send it to a 401K. Saving has to be easy and automatic for it to stand any chance of happening.

That's why ways to help people save their income tax refunds make so much sense. Federal income tax refunds average $2,100 — about 5 percent of the national median income. For most people, tax refunds are a kind of windfall. They give most people the best shot they have to save each year.

If we could change tax forms to make it simple for people to save some of their refunds, they could save more, perhaps much more.

This is exactly what Assemblyman Johan Klehs, D-Hayward, has proposed. Assembly Bill 2439 would allow California tax filers to split their state income tax refund into "money to save" and "money to spend." Right now, taxpayers can only direct their refund to one account. By allowing us to split our refunds between two accounts, we could send $500 to an IRA and get the rest back in cash.


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This would promote saving before the temptation to spend sets in.

Can we expect much from such a small change?

Yes. A test of this simple concept in Tulsa, Okla., showed it can work. Community tax preparation programs offered a "refund splitting" option to 500 low-income tax filers. About one-third wanted to participate and people deposited $649 on average — 47 percent of their refunds — in savings accounts. Most importantly, three out of four of these filers had no prior savings.

This bill has the potential to help those Californians who need it most. New research shows that California has the country's fourth highest rate of "asset poverty." This means that about 8 million Californians don't have enough savings and assets to survive for three months at the poverty level if they lose their jobs. Too many families are one divorce, layoff or medical emergency away from homelessness or government dependence.

Alameda County residents know these risks all too well. More than 50 percent of Alameda African Americans — and 40 percent of its Latinos — live in asset poverty.

When people have savings, they have an economic air bag that can cushion the blow of tragedies. Also, research shows when lower income families have savings and assets, as distinct from income, they are more likely to stay married, work harder, enjoy better physical and mental health and make educational plans for their children.

Other proposals to help people save their tax refunds also show promise. At the national level, the IRS plans to allow people to split their federal income tax refunds by 2007. Others propose that tax filers be able to open savings bonds right on their income tax forms, with the check of a box. This would be of great help to the majority of Americans who don't have an IRA or savings accounts already set up.

One observer called Klehs' proposal "The Little People's Bill." Let's hope the Legislature and governor put the financial well-being of little people first and move this important measure forward.

Anne Stuhldreher is a San Francisco resident and fellow at the New America Foundation, a nonprofit nonpartisan policy institute based in Sacramento and Washington, D.C.