According to The Washington Post, President Bush is hoping to make some radical changes to the federal tax system in his 2004 budget proposal.
The plan has been kept fairly secret by the Bush administration. The Post said the plan was "being wheeled into town inside a Trojan horse of private savings accounts." The plan aims to create new saving accounts that would allow people to avoid paying taxes on investment income (gains from stocks, interest on savings and dividends).
People who have the money to do so can invest it, under this plan, and watch the tax-free money grow and grow. According to a number of economists, "the people most likely to take advantage of the new accounts would be higher-income types who would simply shift assets into the tax-free accounts."
A 2000 Treasury Department study showed that in 2000 only 4% of taxpayers eligible for this type of account in 1995 made the maximum contribution of $2,000.
Nora Toiv. More »