April 1, 2004 | News Releases on Taxes
WASHINGTON, MARCH 31, 2004 - The Heritage
Foundation today praised a proposal to establish Lifetime Savings
Accounts (LSAs) that would let people avoid the "double taxation"
that erodes the value of regular savings accounts.
Michael Franc, vice president of the Washington-based think tank noted that, while there is no "up front" tax advantage to putting money into an LSA, the account's earnings would not be taxed. "By eliminating the second tax on earnings, LSAs offer taxpayers an added incentive to save and build wealth for themselves and their families," Franc said.
President Bush called for legislation creating LSAs last year, but nothing came of it. Today, Sen. Craig Thomas, R-Wyo., and Rep. Sam Johnson, R-Texas, jointly announced a proposal to establish the accounts, which would work like expanded Roth IRAs, but for purposes other than retirement. And, unlike typical retirement accounts, LSAs would carry no penalty for "early withdrawal."
"LSAs will let people save for whatever purposes they choose without having to pay the taxman twice," Franc said. "The combination of increased flexibility and fairer, simpler tax treatment will provide a powerful savings springboard to help working families achieve the American dream."
Lifetime Savings Accounts are just one of several tax policy initiatives recommended by The Heritage Foundation in its recently released "Issues 2004," available online at www.heritage.org/Research/Features/Issues/issuearea/Taxes.cfm