Ron Wyden, poised to become the Senate’s top Democrat on tax policy, said he will push to establish universal savings accounts for all newborns in the U.S. as a way to “really put a dent in the poverty rate.”
Wyden, who will become chairman of the Senate Finance Committee as soon as next week after the Senate on Feb. 6 confirmed Max Baucus as ambassador to China, emphasized he would discuss details with his colleagues before writing the legislation.
“These are areas that I want to talk to senators about,” he said, speaking yesterday in Los Angeles at a conference sponsored by the University of Southern California School of Law and the Urban-Brookings Tax Policy Center.
The Oregon Democrat cited, as a potential model, legislation that New York Senator Charles Schumer proposed in 2009 to provide all children born in the U.S. with a $500 savings account that could be put toward the cost of college, buying a home or retirement.
Under Schumer’s proposal, up to $2,000 could be deposited into the account annually on a tax-free basis, and families up to the median income would qualify for a federal match of up to $500 a year.
Universal savings accounts for children could be part of a broader effort to revamp the U.S. tax code, Wyden said. He described the current code as a “dysfunctional, rotten mess of a carcass.”
“I want a tax code in America where everybody has the chance to get ahead,” he said. “I want to make sure that folks who don’t have much have a chance to get ahead.”
A tax-code revision proposal that Wyden has offered with Republican Senator Dan Coats of Indiana backs the expansion of tax-free savings opportunities by consolidating different types of individual retirement accounts.
Wyden urged passage this year of short-term extensions of tax breaks that lapsed at the end of 2013, including the production tax credit for wind energy and the research and development tax credit, “to serve as a bridge” to broader changes.
“These disparate pieces of the code, if we continue to just prop them up forever, are going to have this dysfunctional mess of a tax system just grow and grow exponentially,” he said.
To contact the reporter on this story: Kathleen Hunter in Washington at email@example.com
To contact the editor responsible for this story: Jodi Schneider at firstname.lastname@example.org