Adam N. Michel


Stephen Moore


The White House is seriously thinking about pushing for new tax cuts to bring added relief to middle class families.

This strategy stands in stark contrast to the approach taken by the Democratic presidential candidates, all of whom have, at one time or another, proposed hiking taxes on income, energy and payrolls as well as adding an entirely new tax on wealth.

Several ideas under consideration in the Oval Office, including White House chief economist Larry Kudlow’s suggestion of a 15% income tax rate for the middle class. Another proposal pairs strong political appeal with good economic incentives; it would allow middle-class families to put as much as $10,000 each year into a tax-free savings account.

This would address a financial trend that almost everyone agrees is troubling. Americans aren’t squirreling away enough money for a rainy day.

One recent survey found that more than half of Americans have less than $1,000 in a savings account — not counting retirement plans like 401(k)s. While the first Trump tax cut raised savings rates for families, helping them build bigger nest eggs would give them better protection.

One factor contributing to the shortage of savings for many millions of households is that savings are typically taxed twice: first when the money is put into the account and again on the interest or capital gain when the money is taken out.

The double taxation provides a greater incentive to spend, rather than save. This punitive treatment of savings leaves Americans more vulnerable to economic downturns and more dependent on federal programs.

Universal Savings Accounts create the opposite incentive, empowering Americans to expand their nest egg. These simple, flexible accounts would allow every American to save more for the future, and the growth on the savings would be tax-free. They offer a way to fully tap into what Albert Einstein once called the most powerful force in the universe: compound interest.

If young people began to stash away even a few thousand dollars a year tax-free into a simple stock index fund (which rises at the pace of the overall stock market), and kept doing that throughout their working lives, by the time they reached age 70, with average returns they could have $1 million or more.

Current high payroll taxes on workers and underfunded entitlement benefits reduce the opportunities and incentives for lower income and middle class families to build their own reserves.

Our hope is that the Universal Savings Account will cultivate a new ethic of savings and thrift in America that will be good for families and society as a whole. Lord knows that the government, with its more than $23 trillion in debt, isn’t going to provide the prudent level of savings we need.

The left’s proposed remedy to the savings crisis — a crisis that government itself helped create — is to charge even higher taxes on private savings and make Americans even more reliant on government programs.

Some, such as Sen Bernie Sanders (I-Vt.), want to raise Social Security benefits, but that can only be done by raising the taxes even higher. Sen. Elizabeth Warren (D-Mass.), who also favors higher benefits, has proposed a higher capital gains tax rate, new financial transactions taxes, new taxes on your bank and a new annual tax on any investment gains, even if you haven’t sold the asset yet.

As a political matter, it’s hard to make a case against Universal Savings Accounts. Families could tap these accounts, without penalty, to pay for emergency medical expenses, school tuition, starting a new business or buying a home. The plan would add to national savings — not subtract from it, as most government spending programs do.

Similar savings incentives have proved popular in the past. IRAs and 401(k) plans have been successful savings vehicles — but universal accounts have even greater appeal and reach. These new savings plans would not include all the restrictions on when you can use the money and penalties for accessing the funds early.

Similar accounts have succeeded in promoting saving around the world. The U.K. and Canada pioneered the model of simple, flexible savings accounts to help people save for their own priorities. A total of 40% of households in Canada have saved money in these accounts, and more than half of those households are low-income savers. While 43% of British adults hold an account and similar to Canada, 52% of account holders earn less than 20,000 pounds (about $26,000).

Universal Savings Accounts are a natural fit for Trump’s populist, pro-growth agenda. The rationale for them is simple: Stop taxing Americans for doing something good; instead, help them save.

When you tax something, you get less of it, and the government’s punitive tax treatment of savings is living proof of that adage. With Universal Savings Accounts, we will tax Americans’ savings less, and we will get more of it.

Adam N. Michel is a senior policy analyst in The Heritage Foundation’s Hermann Center for the Federal Budget. Stephen Moore is a distinguished visiting fellow managing the think tank’s Project for Economic Growth.


(20) comments


Mr. jdinifinity3, the proper phrase is... Couldn’t care less about Bloomberg.


Could care less about Bloomberg.

That's not finger pointing. It's fact.

The reason we have our corrupt financial system is because it exploits the poor and disenfranchised to make the rich even more rich.

Any path to erode worker rights, and the environment, by using them as a means to an end to make more money.

Such is the republican way of life..


It's starting to look like old times here, only without the hatred, which is nice. Life is too short.


Mr. jdinifinity3, “ When it is the rich's fault for them being poor in the first place.”. I thought you were against finger pointing and blame game.


Mr. jdinifinity3, It was you that mentioned the $5 Million Super Bowl Ad, not me. I just thought you would want to know that Billionaire Bloomberg is putting out a $10 Million Ad. And that the DNC is colluding with Bloomberg to steal the nomination from Bernie. Looks like Democrats don’t hate Billionaires after all. Oh the hypocrisy! Lol


Johnson all you did was ignorantly change the subject to suit a political end.

Don't put words in my mouth. I never said that whatsoever. Don't mischaracterize my arguments with your political boondoggle finger pointing. I'm above stupid ppl with stupid arguments as yours.

It doesn't change how either party does waste money that could be spent better elsewhere. It is however one party that turns a blind eye to it, deflects the conversation, rather than owning up to how we treat society and the poor. And one party that does want to distribute that money more evenly amongst society. Rather than demonize said poor for the imbalance in the system. When it is the rich's fault for them being poor in the first place.


Mr. jdinifinity3, Are you talking about the $10 Million ad that Democrat 2020 hopeful Michael Bloomberg is spending? Wait I thought Democrats hate Billionaires. So Bloomberg’s $10 Million Super Bowl ad is good but Trump’s $5 Million Super Bowl ad is bad?

Rumor has it that DNC is dropping the donor requirement for debates, opening the door for Bloomberg to jump up on the debate stage. Thank God Democrats can’t blame Trump for that. Almost sounds like Bloomberg is trying to buy or steal the election from Bernie. More DNC shenanigans to steal the nomination from Bernie, again. Bernie not going to be happy about that.


Don't forget billionaire Tom Steyer.


Ok, Johnson, Bo/Packfan, lets go this route then. Because I think your party is utterly ignorant, misinformed and despicable to the very core...

We spend how much money of defense? How much? So that trillions can go to into spending for depreciated weaponry that sits in the desert? So we can bolster the military industrial complex, to buy more weapons, we don't even use?

And then, you have people on the right, changing the conversation, by saying we are wasting money on education, the poor, immigrants, medical (which is huge tho, I mean pharma's pocketbooks...).

And then, they turn around and say it's ok to spend money on defending our nation? But it's not ok to help those who really need it here at home? That are starving? Poverty? Homelessness? And so, so, so much more....

Those amount to pennies, friggin' pennies of real defense spending, large corporations, and the ultra-already-rich!!!

How much money is spent for a 30second/$5.6million dollars commercial, during the super bowl, that could go to buying some kid shoes, or a hot meal for the day? For school?

That is utterly despicable....on so, so many levels.

Demonizing people, for barely getting scraps, compared to the real wealth thrown around by the trillions then calling the poor loafers? Bums? Enemies of our democracy?

You conservatives are sick in the head...


“The problem is not that people are taxed too little, the problem is that government spends too much.”

Ronald Reagan

Bruce Montplaisir

You do know that Ronald Reagan took us from a $600 billion deficit to a $5.7 trillion deficit. He did have a few lucid moments when he asked what should be done about the deficits he was creating but was told it will be fine. It is fine for him.


You do know that Obama added $8.5 Trillion. In all fairness both Reagan and Obama inherited a bad economy.


Plain and simple, the Rats are trying to buy votes with paid student debt, taxpayer paid future college and beyond, tax payer paid past medical bills, tax payer Medicare for all( I’ve paid in for 44 years and some illegal arse will get it for free, same with college, I paid for my kids) , $1000 per month for choosing not to work, etc, etc, etc. DISGUSTING our country will fail, no one will work


Well BO for you April surprise coming. Then another. As noted, America gets mortgaged for short term bullroar. The sad thing is, if we survive us, is all our children will have to pay.

We are leaving them steaming republican "squat!" And you still back the dinger....Achtung!

Bruce Montplaisir

This sounds like another Putin idea to help Reputnicans mortgage the United States to Russia, China, India, Spain and other countries around the world. What happens when the mortgage comes due and our national treasury is short of funds? Will the rest of the world just say that's okay when we file for bankruptcy as if our nation was a casino?


You do realize the Russian connection with Trump never happened, don’t you? Or are you living under a rock?


Trump and the republicans are all about helping themselves. And they win elections by tricking those into believing that they are in the best economic interests of the poor working class, when the opposite is true.

That's why half the population are idiots, incapable of discerning their own fiscal welfare with respect to best choice of candidate.

Take this article for example. It preys on the weak minded for those who don't know how economics and big business work.

What they don't tell is that by having your investment savings tied to the market, you are both funneling huge gobs of money to the rich, and at the same time, bare all the burden if the market crashes, while they parachute out.

Typical dirty, backstabbing, snake oil salesman, sales pitches.

Typical republicans.


I suppose you think paying off a trillion dollars in student loans is beneficial to the taxpayer?


First I have heard of this. If so, republican will likely point...again.


Listen to the Rats, everything they want will bury the taxpayers, Trump is all about helping the tax payer.

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