How Many Tax Savings Accounts Do Americans Need?

Posted: 6/21/2015

Trigger

These are two articles celebrating the recent passing of a law in Nevada establishing education savings accounts:

http://www.pacificresearch.org/article/all-states-should-emulate-nevadas-universal-school-choice-plan

http://fee.org/anythingpeaceful/detail/nevada-passes-universal-school-choice

Besides, I know the Goldwater Institute has been a strong advocate for such accounts for some years.

Too Many Tax Savings Accounts In The Tax Code!

Do you know how many different retirement savings accounts there are already available in the federal income tax code (e.g. Simple IRA, Traditional IRA, Roth IRA, SEP IRA, Keogh plan)? Too many!

Besides that we have e.g. health savings and college savings accounts (Section 529).

A Principled View

The current tax code is already complex enough, simplification and tabula rasa are in order not piling on.

1. Savings accounts are complex contraptions serving tax accountants, subsidizing colleges, health providers and so on. They tend to proliferate and become more complex over time once established. Politicians can not resist to tinker with them all the time
2. Savings accounts cloak the reduction of tax revenues and they usually benefit more clever people or those with good tax preparers
3. Foremost, the tax code should serve only to generate tax revenues for government in the most uniform, simple, fair, and transparent way possible. Any welfare programs or government subsidies should be strictly only on the expenditure side of the government budget. This would greatly enhance transparency etc. Politicians would have to explain their largesse etc.