Stimulate The Economy By Stimulating Saving? One Progressive's Idea

By Isaiah J. Poole

Created 01/23/2009 - 4:46pm

While conservatives offer tax cuts as an all-purpose elixir, whether they make sense or not, the truth is that our tax code is out of whack and we should be thinking about progressive reforms.

Laura Kalick, a veteran tax attorney based in Washington, has been thinking about one such reform that she says will provide short-term economic stimulus while addressing the nation's notoriously low savings rate. Her idea follows. What do you think? Let's have a dialogue about this and other progressive tax reform ideas.

We are in an economic crisis that has many causes, one of which is excessive borrowing. We are a nation with many tax laws that encourage people to save for retirement, education and health care, but there is no incentive to just save for a rainy day or save to buy a car. And the rules are too complicated for the average person to understand. Furthermore, there is a myriad of paperwork and fees that accommodate setting up accounts that are usually invested in securities.