A tax cut by any other name.(Politics)(Book Review)

John Snow et al., "Tax-Free Savings and Retirement Security Opportunities for All Americans," U.S. Department of the Treasury, February 2004 (ustreas.gov)

Hamstrung by a growing deficit, President George W. Bush is unlikely to propose any cuts in tax rates in the near future. His campaign economic plan, however, proposes a variety of new savings vehicles to make it easier for Americans to accumulate money tax-free for large purchases or retirement. The Treasury Department provides some details as to how Bush's plan, currently under debate in Congress, would work. If implemented in full, the plan would effectively provide another large, although targeted, tax cut (by allowing people to save income without being taxed) while simultaneously increasing government assistance for people with low incomes.

Under Bush's proposal, Individual Retirement Accounts, 401(k)s, 403(b)s, and a dozen other retirement savings vehicles would be consolidated into two types of accounts: Retirement Savings Accounts and Lifetime Savings Accounts. A new type of account, Individual Development Accounts, would be created for people with low incomes.

The new Retirement Savings Accounts, both individual and employer-supported, would replace all current retirement vehicles. They would have higher contribution limits, and these would be indexed for inflation. As with current retirement accounts, individuals could make contributions with pre-tax or after-tax ...