Snow Advocates Overhaul Of Tax-Preferred Savings Accounts

by Mike Godfrey, Tax-News.com, Washington

24 November 2003

The Bush administration is considering a new set of tax free saving vehicles for possible inclusion in next year’s budget, Treasury Secretary John Snow told the Associated Press last week.

The tax-preferred accounts are designed to be used for such purposes as college, healthcare or retirement funds and will overhaul the existing system, which Snow argues is too restrictive.

"America has all sorts of savings plans, but these are tightly circumscribed," he observed, adding that: "You can only save for purpose A in this fund or purpose B in this fund or purpose C in that fund. The problem with putting all these restrictions on savings is that people don't save very much."

The proposals were originally included in the 2004 budget last February, but were shelved after Democrat objections that they would add to the nation’s mounting budget deficit. However, this is an argument Snow refutes.

"We would dispute the argument that they, quote, blow a hole in the deficit - the budget," he told the AP. "I don't think they do if properly quantified. What they do is give average Americans much better savings opportunities by eliminating the tightly structured rules that apply to the individual savings vehicles today."

Amongst the proposed vehicles Snow wants included in the 2005 budget are a general purpose ‘lifetime’ savings account, and a new retirement account that will replace the current individual retirement account.

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