Taxes Discourage Savings Incentive

Kathy Kristof’s column “Few Americans Know How to Budget” (Dec. 11) was very true but incomplete. There is another major reason why people are discouraged from saving: taxes.

I too once said to myself that it was time I went on a budget. I am a single person with no dependents. I had a good job, a good salary, and it was time I started a savings plan. Then reality set in: First, my “good salary”--one-third went to taxes, Social Security, etc.

Now, assuming I had any money left over after meeting my living expenses, regular bills and the unexpected, such as new car tires, miscellaneous medical crises and the like, and I wanted to plop it into a savings account or retirement fund, I was then faced with America’s good old double taxation: The taxes I have to pay on any interest earned on those savings, savings that were already taxed to death before I saved them! After those taxes, any savings accumulated would amount to just what I put in--I wouldn’t be ahead, or at least not enough to make it worthwhile.

Our government penalizes success and rewards failure. Even Japan doesn’t tax interest on savings accounts, and it has the highest savings rate in the world.

Average U.S. citizens rightfully have the attitude, “Every time I get ahead, the government takes it away in taxes.” Unless you’re in the megabucks income bracket (and can afford a smart tax lawyer who milks the tax code loopholes), this attitude governs any “budget” decision you make. Not an encouraging picture!

MELODY SUPPES

Palos Verdes