[Congressional Record Volume 143, Number 142 (Tuesday, October 21, 1997)]
[House]
[Page H8903]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               MIDDLE-CLASS TAXPAYERS NEED EXPANDED IRA'S

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey [Mr. Saxton] is recognized for 5 minutes.
  Mr. SAXTON. Mr. Speaker, I take this 5-minute special order to 
discuss with my colleagues why I believe it is important that we expand 
the IRA, Individual Retirement Account Program, for the American 
taxpayers.
  I rise today to address what I believe is an urgent need to increase 
incentives to save and invest for middle-class taxpayers. Earlier this 
year, I introduced a bill which we called the Investment Revitalization 
Act of 1997 that 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 the reasons for 
penalty-free withdrawals from IRA accounts.
  By increasing 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, which is exactly what 
this House has been trying to avoid.
  Why? Well, in part because there have been concerns expressed about 
the economic viability of families when they are exposed to 
unemployment and other setbacks, the exposure of families to medical or 
other emergencies, the great difficulty in coping with increased 
educational costs, the heavier tax burden over the last three decades, 
and the looming problems associated with the retirement of the baby-
boomers.
  These are all issues that we have traditionally set up as reasons for 
our families to save, and this IRA program will help and encourage 
Americans to do so.
  Most of these problems are related to the fact that our income tax is 
systematically biased, however, biased against personal savings, and 
this makes it much harder for families to accumulate the resources 
successfully to address these needs as they arise and encourages 
families to depend more and more on government programs.
  More extensive use of the IRA would go a long way toward removing the 
bias against saving and investment in the Tax Code. This legislation is 
intended to suggest a new direction and to guide tax policy into the 
next century.
  The basic idea is to expand our IRA's enough to strip away much of 
the multiple taxation of personal savings and investment which is 
vital. My IRA bill increases, therefore, the $2,000 IRA deduction that 
exists today by $500 every year for the next 10 years, and, at the end 
of this period, the deduction cap would, therefore, be $7,000.
  In addition, to make IRA's even more attractive, penalty-free IRA 
withdrawals would be permitted for medical care, for college education, 
unemployment, and for first-time home ownership.
  Over some number of years, a few years, a thrifty middle-class family 
could accumulate sums in excess of $100,000 or more. Then, when a 
career setback or an unexpected medical problem occurred, they would 
have significant assets to fall back on, and not have to look to the 
Government for help.
  Some would save aggressively for children's education expenses, or 
for some other reason, attracted by the deduction, but also knowing 
that earnings compound even faster without the annual tax bite. Others 
might focus solely 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 as well as savings.
  Government policy has undermined middle-class savings incentives for 
far too long. If we are concerned about inadequate personal savings and 
related problems, it is time for the 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, and then be surprised when they 
demand more and more government services to help deal with these very 
difficult problems.
  Let us reduce the multiple taxation on middle-class savings and get 
serious about expanding the individual retirement account, IRA system.

                          ____________________