The Effectiveness of Tax-Preferred Savings Vehicles in Promoting Saving and Retirement Security
In light of the President’s recent proposal to consolidate and expand a number of existing tax-favored savings accounts, the American Council for Capital Formation presents the following Special Report to promote discussion and debate on the impact of such plans on household saving and U.S. economic growth.
Since the early 1980s the U.S. personal saving rate has declined dramatically. Given the importance of saving for investment, growth, and the retirement security of American households, many economists and policymakers view this trend as cause for concern. In fact, the Bush Administration recently announced a proposal to consolidate and expand a variety of existing tax-preferred saving plans into three new accounts. Elements of the proposal will reduce complexity, encourage personal saving, and enhance the retirement security of all Americans. While there has been considerable debate over the effectiveness of tax-preferred savings accounts, there is a growing body of research that suggests that such plans increase personal saving and improve the financial outlook of Americans at retirement.Download Report