Bush’s Special Savings Accounts
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Your editorial scorn for Vice President George Bush’s plan to promote saving by the less well-off is undeserved (“Saving Face, Maybe,” Sept. 29). A great many individuals would take advantage of the Bush plan just as they did the Individual Retirement Accounts before Congress slammed that door to tax-deferred savings.
Since the Bush plan limits tax-deferral benefits to only $1,000 per year, it won’t enable the saver to buy a house or start a business, but he or she certainly can make a start toward financing college. True, your unrealistic example of a one-time deposit of $1,000 at 10% for five years won’t improve things much.
But if, as is the more likely case with people of limited income, the saver invests $83.33 every month ($1,000 per year) over the five years at 10% he will accumulate a nest egg of $6,234.91 after settling the tax bill, compared to $5,315.86 for the annual taxpayer--$919 better! Moreover, the IRS will receive $58.06 more in taxes by the tax deferral.
It actually seems Bush has an idea worth developing to reverse the disastrous shrinkage in private saving.
BURTON P. SAUER
Hermosa Beach
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