(CNSNews.com) - A tax reform group says its top priority for 2004 is to end the double taxation of savings.
Americans for Tax Reform is congratulating Treasury Secretary John Snow for endorsing its proposal to allow interest and investment income to grow tax free in special savings accounts.
In a speech on Thursday, Snow advocated tax reform that will encourage Americans to save more of their money.
ATR explains the current situation this way: People who earn paychecks have federal income taxes deducted from them. Then those workers have a choice: They may spend the remaining money or they may save it.
If they spend the money, the federal government does not impose any direct taxes. But workers who save their earnings must pay taxes on the interest and investment income generated by the savings. That's the double-tax trap.
ATR wants Congress to set up "lifetime savings accounts" and "retirement savings accounts" that would operate like Roth individual retirement accounts. In other words, contributions would not be tax deductible, but any earnings generated by the accounts would accrue tax-free and would not be taxed on withdrawal.
"Boosting the savings of working Americans will provide the capital needed to finance new investment and create jobs," said ATR President Grover Norquist in a press release. "Congress should take up this issue immediately," he said.
ATR also wants Congress to make all previous tax cuts permanent; allow for full business expensing; and permanently kill the estate tax.