Treasury Renews Campaign for Tax-Free Savings Accounts
Jonathan Weisman
Washington Post, December 6, 2003, Page E1
This informative article examines a new proposal being considered by the Bush administration, which would create a new type of tax-sheltered account that would replace traditional individual retirement accounts (IRAs). According to the article, the money in these accounts would be taxed when it is first deposited, but all subsequent accumulations would be tax-free.
It is important to note that if this tax treatment were adopted, as opposed to the tax treatment of traditional IRAs (in which money is taxed when it is withdrawn, but not when deposited), it would be disadvantageous to millions of middle-income households. Many middle-income families face a higher tax rate during their working years than after they are retired; therefore it is beneficial to them to be able to defer their taxes until after retirement. This is not an issue for most upper-income households, who will be in the top tax bracket throughout their whole life.
