|
|
The
views expressed
on this page are soley those of the author and do not
necessarily
represent the views of County News Online
|
The Daily Signal
A Complex Tax
System Prevents Americans From Saving
Rep. Dave Brat & Sen. Jeff Flake
April 19, 2016
Another tax day has come and passed only to once again remind us of the
increasing financial burden that government places on individuals and
families each year. Unfortunately, as taxes and onerous regulation
continue to increase, the U.S. personal savings rate has decreased to
5.5 percent. Our savings rate was two to three times higher than that
in the 1970s and 1980s, with a peak of 17 percent in 1975.
Today, many lack the recommended savings level of three to six months
of income. In fact, according to a recent Federal Reserve survey, only
53 percent of adults would be able to cover an emergency expense of
$400 without selling an asset or borrowing.
Part of the problem is the tax code being too complex, making it
difficult for people to understand their options to invest and save for
the future. A more streamlined and flexible saving account to enable
and encourage savings is needed. To that end, we have introduced the
Universal Savings Account Act, legislation that will empower all
individuals to set aside money for all of life’s challenges and
opportunities.
Similar to Roth Individual Retirement Accounts, the Universal Savings
Accounts established in our bill are designed to offer tax-free
earnings and distributions without the restrictions, confusion, and
penalties associated with other tax-advantaged accounts. With these
accounts, any American adult could save and invest up to $5,500 per
year of post-tax income without being burdened by additional taxes when
those investments grow.
While existing savings options are complicated and limited in their
practicality, Universal Savings Accounts will be simple, flexible, and
easy to use. While we anticipate that Universal Savings Accounts could
be a boon to those looking to supplement retirement or college tuition
savings, these tax-free accounts could just as easily be used to help
save for the medical expenses, the purchase of car or home, or other
costs incurred in everyday life.
Universal Savings Accounts would have the added benefit of reducing
double taxation and expanding national savings. With a growth rate of
only 0.7 percent in the 4th quarter of 2015, it’s imperative Congress
advance tools such as Universal Savings Accounts that incentivize both
savings and investment.
Tax day should really be a reminder that there’s no better way to
empower our cash-strapped middle class than to allow Americans to keep
and save more of their hard-earned wages. Making Universal Savings
Accounts a reality is a great way to jumpstart that effort.
Read this and other articles at The Daily Signal
|
|
|
|
