[Congressional Record Volume 145, Number 32 (Tuesday, March 2, 1999)]
[Extensions of Remarks]
[Page E314]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          IRA EXPANSION NEEDED

                                 ______
                                 

                            HON. JIM SAXTON

                             of new jersey

                    in the house of representatives

                         Tuesday, March 2, 1999

  Mr. SAXTON. Mr. Speaker, the current tax system has many problems, 
but one of its main defects is its bias against personal saving. 
Personal saving is taxed once out of income, and then the return to 
saving is taxed once again. This multiple taxation penalizes personal 
saving, 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. Today I am introducing 
legislation to boost IRA deduction limits $500 per year over several 
years. When fully phased in, a middle class family could deduct up to 
$7,000 for an annual IRA contribution. I strongly urge that an increase 
in IRA deductions be a part of any tax relief plan offered in this 
Congress.
  An increase in IRA deductions would help middle class families save 
for the future, become more financially independent, and become better 
able to deal with unexpected events. Expanded IRAs would also give 
middle class families a greater stake in the U.S. economic system. It 
is a tax incentive that average Americans would understand and strongly 
support.
  An increase in IRA deductions would increase personal saving, 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 their productivity and income. The current treatment of 
saving in our tax code is literally counterproductive. This is 
hampering our economy over the long term and reducing the American 
standard of living relative to what it would otherwise be.
  Many in Washington bemoan the low savings rate, but if we want 
personal saving to increase, we should increase IRA deductions for 
middle class taxpayers. A tax code that penalizes saving and investment 
makes no sense. Middle class taxpayers need a means of addressing their 
responsibilities to save for retirement, higher education, medical 
expenses and long term care, and unemployment. My legislation provides 
for penalty-free withdrawals for these purposes. Federal tax policy 
should not discriminate against taxpayers willing and able to take on 
these responsibilities but are prevented from doing so by the 
destructive impact of the current tax system. Let's limit the tax 
discrimination against personal saving.

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