Tax reform that could help boost economy

 

Maybe if the Canadians and Warren Buffett are making off with Burger King for tax purposes, we could get something back from the land of maple leaves in the form of something everybody has been yakking about, but not doing anything about, namely, tax reform.

A simple tax reform that could help families and promote economic growth comes from, of all places, Canada, the land of the great white north not normally known for sensible taxation. But, stick around long enough.

What the Canadians offer is called the Tax-Free Savings Account, and according to the Wall Street Journal, it has been a huge win for the ordinary folks.

The so-called TFSAs were only ushered in about five years ago, but nearly half of Canada's subjects have signed up for them, as opposed to U.S. households where only 38% of people hold any kind of Individual Retirement Account.

The thing most like the Canadian savings accounts would be Roth Individual Retirement Accounts where the employee pays taxes on earning before they put the cash in, and then the money grows - tax-protected. Then, people pay no taxes when they start withdrawing.

But the Roth accounts are laden with restrictions, and you can't withdraw your cash when you may want to, or need to, without incurring stiff penalties. Lots of Americans who want to build their savings hesitate about putting their cash into a Roth account.

The Canadian Tax Free Savings Account function like Roth, but with a boost like high-test fuel. Savers can deposit up to $5,500 after taxes each year, and all account earnings and withdrawals are tax-free. As opposed to the Roth accounts, the funds can be withdrawn at any time and for any purpose, without penalties or taxes.

Gee, that sounds sensible. Why don't we do it?

It's also a flexible savings device. If you only put in $2,000 one year, you can put in up to $9,000 the next year ($3,500 plus $5,500).

These accounts, according to the Journal, can be opened easily at a branch bank or online.

According to Chris Edwards, who chairs tax policy studies at the Cato Institute, and Amity Shlaes, who chairs the board of the Calvin Coolidge Foundation, the U.S. variant could be dubbed a Universal Savings Account. No need to junk education savings accounts, or Roths for that matter. Just give citizens who are inclined to save another option that likely will do them an enormous amount of good, and won't add to their household tax burden.

Growth that comes from Americans saving more and putting more time in on evaluation of investments instead of mastering our incomprehensible tax law can only be good for a wheezing U.S. economy that needs all the help it can get.

If presidential candidates are looking for a tax policy that could take them to the White House, they could do worse than this one.

 

Recent Columns >





Home      Main      Second Front      Business      Classified      Sports      Daily Showcase      Valley Life

Annie's Mailbox | Letters | Obituaries | Opinion | Senior Scene | AV Lifestyle | Weather | William P. Warford | Terms of Use | Privacy Policy

Antelope Valley Press, Palmdale, California (661)273-2700 | All Content & Photography Rights Reserved | Website Designed By: AVWeb Designs