Feb. 8 (Bloomberg) -- 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.
House Republicans, including Ways and Means Chairman Dave Camp of Michigan, want to wait on the lapsed tax breaks, known as extenders, and consider them as part of a broader tax-code revision.
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