February 8, 2004 | WebMemo on Social Security
The ink isn't even dry on the President's new budget, and many in Congress, for all sorts of reasons, are already attacking it. In a fashion very similar to what happened last year, it seems that arguments over the budget deficit will relegate the President's proposed savings plans to being nothing more than an idea. If so, this will mark the second year in a row that one of the President's best ideas remains largely unnoticed.
By allowing individuals to save their money without multiple layers of taxation, the proposed plans would give taxpayers added incentives to save money and build their own wealth. Unlike current law, which taxes the money put into regular savings accounts and the money earned in those accounts, the new plans would ensure savings are taxed only once. Collectively, the proposal would consolidate the various types of tax-advantaged savings accounts and simplify their regulation.
Here is a summary of the proposed savings plans:
These savings plans are indicative of why America is viewed as the land of opportunity. One of the great promises of America is that its citizens are free to create their own wealth. Taxation of that wealth at every possible opportunity only serves to lessen individuals' incentives to save and to divert their efforts. Rather than spending time on productive wealth-creating endeavors, which would help provide opportunities for others, individuals now devote too many resources to keeping wealth out of the government's reach.
The idea behind creating these accounts is sound. Providing individuals with better incentives to build their own wealth is exactly why the free market has proven superior to "planned" economies. It is precisely because LSAs, as well as the simplifying RSA and ERSA plans, would provide good incentives for individuals that they should be put before Congress.