P. M. BRIEFING : Tax-Free Savings Considered
The White House has completed a proposal aimed at bolstering the nation’s lagging savings rate that includes giving tax-free status to some bank deposits more than 7 years old, a Bush Administration official confirmed today.
The official did not give details, but the New York Times reported that the centerpiece of the President’s plan is a new account that he hopes will help entice middle-class Americans to save more money.
The newspaper, citing White House officials, said that initially deposits in these accounts would not be tax-deductible in order to not create an immediate strain on Treasury coffers. However, if after seven years depositors have accumulated sufficient sums, the government would lose the right to tax the new accounts.
Bush is confident that the benefits of a higher national savings rate would in time offset the loss caused by making the accounts tax-deductible, the official said.
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