[Congressional Record Volume 143, Number 21 (Tuesday, February 25, 1997)]
[House]
[Page H592]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 INVESTMENT REVITALIZATION ACT OF 1997

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 21, 1997 the gentleman from New Jersey [Mr. Saxton] is 
recognized during morning hour debates for 5 minutes.
  Mr. SAXTON. Mr. Speaker, I rise today to announce that on Thursday I 
will introduce a bill designated to increase incentives to save and 
invest for middle class taxpayers. The bill, known as the Investment 
Revitalization Act, or the IRA, of 1997, would greatly increase the 
deduction ceilings for IRA contributions, increase the income caps 
which currently prevent many middle class taxpayers from using IRA's 
and expand opportunities for penalty free withdrawals from IRA 
accounts. By increasing the incentives to save, this legislation would 
boost long term economic growth and help middle class taxpayers help 
themselves in addressing a wide variety of economic contingencies that 
might otherwise lead to expanded government activity.
  For many years policymakers from across the spectrum have complained 
about inadequate levels of personal savings and investment. There have 
also been concerns expressed about the economic vulnerability of 
families to unemployment and other setbacks, the exposure of families 
to medical and other emergencies, the great difficulty in coping with 
increased education costs, the heavier family tax burdens over the last 
three decades, and the looming problems associated with the retirement 
of the baby boom generation.
  Most of these problems are related to the fact that our income tax is 
systematically biased against personal savings and this makes it much 
harder for families to accumulate resources to successfully address 
their needs as they arise.
  The IRA bill which I will introduce on Thursday will go a long way 
toward removing the bias against savings and investment in the current 
Tax Code. This bill is intended to suggest a new direction and to guide 
tax policy into the next century. The basic idea is to expand IRA's 
enough to strip away much of the multiple taxation of personal savings 
and investment in the United States for the vast majority, particularly 
of middle class taxpayers.
  The flexibility of this approach would give families the financial 
ability to successfully address their needs as they see fit. This IRA 
bill increases the current $2,000 IRA deduction ceiling by $500 every 
year for 10 years. At the end of this period, the deduction cap would 
be $7,000 each year.
  Second, the bill would increase the income ceiling $10,000 each year 
for 6 years so that taxpayers filing joint returns up to $110,000 of 
adjusted gross income could take advantage of IRA deductions.
  Third and finally, the penalty free withdrawals would be permitted 
for medical care, education, employment, and for first-time 
homeownership. When a career setback or unexpected medical problem 
occurs, they would have the sufficient assets to fall back on. Some 
would save aggressively for children's college education, expenses or 
some other reason, attracted by the deduction, but also knowing that 
earnings compound even faster without a tax bite. Others might solely 
focus on retirement.
  In my view, the adoption of this legislation would largely reverse 
the current discrimination against personal savings and investment, 
thus boosting long-term economic growth. The economic benefits of this 
concept would be significant. Government policy has undermined middle 
class savings incentives for too long. If we are concerned about 
inadequate personal savings and related problems, it is time for U.S. 
tax policy to become less counterproductive.
  We cannot maintain a Tax Code that systematically discriminates 
against personal savings and investment and then be surprised when 
people fail to save, creating serious problems for public policy. A 
fundamentally different approach to the tax treatment of personal 
savings is urgently needed. Let us reduce the multiple taxation on 
middle class savings.

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