[Congressional Record Volume 143, Number 144 (Thursday, October 23, 1997)]
[House]
[Page H9475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          IRA EXPANSION NEEDED

  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, the Congress is about to enact one of the 
most important proposals in several years, legislation to reform the 
antitaxpayer bias of the IRS. Once this legislation to protect taxpayer 
rights is passed, the focus will shift once again to questions 
involving tax policy. As we all know, a national debate on fundamental 
tax policy issues is expected in coming months. This debate will center 
on several proposals advanced for sweeping reform of the current income 
tax system.
  Many expect actual tax reform to emerge only after an extended period 
of debate ends with the emergence of a consensus on a tax package. 
Given the complexity of the issues involved, this process could take a 
long time, perhaps years.
  In the interim, the current counterproductive tax system would still 
undermine economic incentives while tax reform efforts proceed. Some 
action is needed now to limit the damage resulting from the current tax 
system. The tax system we know today has many problems, but one of its 
main defects is its bias against personal savings. Personal savings is 
taxed once out of income and then the return on savings is taxed once 
again when we tax interest.
  This multiple taxation penalizes personal savings, a major source of 
economic growth, so it is no surprise that America has one of the 
lowest personal savings rates in the world.
  This bias can be addressed by increasing the tax deduction for IRA 
contributions, currently set at $2,000 annually. Earlier this year, I 
introduced a bill, H.R. 891, to boost IRA deduction limits by $500 per 
year over several years. When fully phased in, a middle class family 
could deduct up to $7,000 a year for an annual IRA contribution. I 
strongly urge that an increase in the IRA deductions be part of any tax 
relief plan offered in 1998.
  An increase in IRA deductions would help middle class families save 
for their future, become more financially independent, and be better 
able to deal with unexpected events and become less dependent, less 
dependent on government. It would also give them a greater stake in the 
United States economic system. It is a tax cut that average Americans 
would understand and strongly support.
  An increase in IRA deductions would increase personal savings, a 
major source of investment and economic growth. This would help firms 
to supply their workers with the best and most advanced tools, thus 
increasing productivity and income. If we want personal savings to 
increase, we should increase IRA deductions for middle class Americans. 
A tax code that penalizes savings and investment makes no sense.
  Middle class taxpayers need a means of addressing their 
responsibilities to save for retirement, for education, for medical 
expenses, for unemployment, for first-time homeownership and perhaps 
some other purposes. Federal tax policy should not discriminate against 
taxpayers willing and able to take on these responsibilities for 
themselves, but are prevented from doing so by the disruptive, 
destructive impact of the current tax system.

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