Tax Reform Should Encourage More Saving, Not Less: New at Reason

Republicans want tax reform, but their refusal to cut spending forces them to look into all sorts of revenue raisers. Some are good, such as eliminating the deductions for state and local taxes. Others are counterproductive, such as the threat to significantly decrease the tax deduction on 401(k) accounts, potentially reducing the overall levels of savings for the millions of Americans using them.

Instead, they should keep the deduction intact, hence encouraging savings—and in addition create universal savings accounts. There are rumors that they are considering such a move.

First, let me complain about the no-good proposal to reduce the 401(k) tax deduction from $18,500 to $2,400 and expand Roth individual retirement accounts in their place, writes Veronique de Rugy.

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