Published
April 26, 2004
BY LEE
TERRY
The
writer, a republican, represents Nebraska's 2nd
District in the U.S. House of Representatives.
There is a reason why U.S.
economists are smiling more nowadays. Initial
jobless claims are at their lowest level since
Sept. 11, 2001; March marked the seventh straight
month of growth in job creation; home ownership
is at an all-time high; and the stock market has
gained more than $4 trillion over the past year.
As a result, more Americans
are earning a paycheck and putting bread on the
table than at any other time in the nation's history.
This economic recovery has
been an amazing comeback story. But there is another
set of indicators that has failed to make the
headlines - figures that should concern us all.
Last year, 1.6 million Americans
filed for bankruptcy, up 6 percent from 2002.
Consumer debt rose to a record $2 trillion, as
the average credit card debt topped $9,000 per
household. The average American is saving only
about 2 percent of annual income, a record low.
While these figures have escaped
most news media outlets, Congress has taken positive
steps to help debt-burdened Americans by allowing
them to keep more of their income.
A year ago, Congress passed
a new round of comprehensive tax relief. In all,
24 million U.S. families with children received
tax refund checks ($400 per child) totaling $14
billion. Today, instead of lining Uncle Sam's
pockets, this is money going to education savings
accounts, home repair expenses or perhaps just
basic necessities such as clothing or groceries.
The point is, the money is back in the hands that
earned it.
Congress last year also reduced
the tax penalty on married couples and lowered
capital gains taxes from 20 percent to 10 percent.
Thanks to these new tax cuts, it is estimated
that Americans kept an additional $50 billion
of their income for tax year 2003.
What has this meant for Nebraska
families? According to the Treasury Department:
• A married
couple with two children and income of $40,000
saw their taxes fall from $1,178 to $45 for tax
year 2003, a decline of 96 percent.
• A married
couple with two children and income of $60,000
saw their taxes reduced from $3,750 to $2,850
for tax year 2003, a decline of 24 percent.
These are meaningful savings
that give families more financial freedom. This
year, it is estimated that 111 million households
nationwide will save an average of $1,500, for
a total of $176 billion.
This is why Congress must now
make these tax cuts permanent. I am, of course,
concerned about the federal deficit. That is why
I support the House budget plan, which would cut
the deficit in half within four years. But we
must first address the personal debts of American
families. With an annual budget of approximately
$2.5 trillion, Washington should tighten its own
belt by cutting wasteful spending before asking
the taxpayers to sacrifice more of their income.
Yet making tax cuts permanent
is only a first step. There are several thoughtful
proposals now before Congress that would help
brighten the financial outlook for all Americans.
To encourage long-term savings
and investments, I have co-sponsored legislation
to increase the yearly maximum that can be put
into Individual Retirement Accounts and 401(k)
accounts.
I have also co-sponsored a
bill to reduce taxes on interest earned on savings
in bank or credit union accounts. With more than
90 percent of today's retirees dependent on Social
Security for critical financial support (compared
to only 30 percent four decades ago), these proposals
would give future retirees the ability to be more
financially self-sufficient.
I also endorsed the end of
unfair double-taxation on dividend income. With
more than half of all households owning stock
today, some economists are predicting stock market
gains of 10 percent to 20 percent if this double
taxation is eliminated.
But even with progressive proposals
like those, the issue of personal financial management
needs more than just the attention of Congress.
Individuals, businesses and schools must all be
part of the solution.
A study released this month
showed that U.S. high school seniors could correctly
answer only half the questions they were asked
about personal finance. Financial literacy programs
should be a staple of school curriculum. Once
students learn the power of saving and compound
interest, they are likely to be much more enthusiastic
about saving for their future.
The same holds true for workers.
While most employees are offered a variety of
retirement plans, many are unsure which retirement
plan is best for them. Businesses should help
workers by offering - or requiring - educational
programs on retirement, personal finance, insurance,
saving, home-buying and paying for college.
We are the most prosperous
nation on Earth. By coordinating our efforts,
allowing Americans to keep more of their earnings
and drawing attention to the challenges of consumer
debt and individual savings, we can help ensure
that all citizens of this great country have the
chance to enjoy the rewards for their years of
hard work.
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