Tax preparation might appear dull on paper. But for Rhodes College Professor Ferron Thompson, who teaches a course called Taxation and the Working Poor, the memorable moments he's shared with his students are too numerous to count.
"When a student comes back [to the same class] the second year and works without credit so that they can continue to give back to the community, that is a reward within itself," Thompson said.
Thompson's course, which is open to Rhodes students of all majors, began last spring with 32 students who assisted about 400 local, low-income taxpayers. Their work resulted in $762,000 in refunds and $120,000 in saved tax preparation fees. This year, 28 students have prepared 667 tax returns, which resulted in $1.6 million in refunds and saved people $150,000 in tax fees.
Most of Thompson's students come through the door with little to no knowledge about taxation. Not only do those students learn to become certified tax preparers, they also examine how the U.S. federal tax system affects low-income communities while breaking down misconceptions about the lives of the working poor.
"A popular misconception is that the working poor are there by choice," Thompson said. "[That] they are lazy and have no ambition to better themselves. The fact is that opportunities to change their 'lot in life' are difficult to find."
A bulk of the required work is volunteering — filing community members' taxes and preparing their returns. Students volunteer at the Binghampton Development Corporation, Ed Rice Community Center, Church Health Wellness Center, and Street Ministries. The program will soon expand to three additional sites.
"Very few students have had the need to take a look at taxation and how it affects them and others," Thompson said. "The biggest stride we achieve is to make them aware of how taxes affect everyone in all walks of life with an emphasis on the working poor."
There are three types of tax in Tennessee. Thompson said federal income tax has little effect on the poor: "They don't make enough to be liable for tax under the current progressive system of standard deductions and exemptions."
Payroll taxes affect everyone who works (the current withholding rates are 6.2 percent for Social Security and 1.2 percent for Medicare): "In theory, these are not true taxes as they do provide a future benefit to those who pay them. The way the Social Security system has been abused makes the assurance of those future benefits unknown at the present time."
Lastly, there are consumption taxes (sales tax, gas tax, tobacco and alcohol taxes): "[These] by far have the most regressive effect on the poor and lower middle class. No matter the individual's income, these taxes are assessed on consumption and therefore affect more adversely those making low incomes who consume all they earn."
Avery Stewart, 22, a senior commerce and business major, previously took Thompson's Individual Federal Income Tax class before enrolling in Taxation and the Working Poor. Stewart, who volunteered six hours per week and on multiple Saturdays, says the course gave her a new perspective.
"This course really makes you see how difficult it is for individuals and families, many of whom are working multiple jobs, to make ends meet and how much of a burden the taxes can be," Stewart said. "It also makes you see how much of a difference a refund can make to an individual or family who needs it."
What's rewarding, Thompson said, is seeing students gain a better understanding of taxation methods and the obstacles some people face.
"I like to think that the students leave with a solid understanding of taxation of all types and how it affects all areas of our population," Thompson said. "[The program does] no harm, only good."