New York Times on National Savings Rate

H&R Blockbuster,” New York Times, 17 May 2005,

A good suggestion from Nyt on increasing national savings: government-matching of IRA contributions

Another important reason is that typical tax- sheltered savings accounts – unlike the matched I.R.A. deposits in the H&R Block test – are not structured to take advantage of how people actually behave with regard to their money. It is more difficult to part with a portion of one’s paycheck than it is to save part of a tax refund because a paycheck represents bread and butter, while a refund seems like a windfall. Psychologically, a match that is paid directly into one’s account is more gratifying than a tax write-off. And then there’s convenience. H&R Block made it easy for its clients to save. We can’t say the same thing for the United States Congress, with its hodgepodge of poorly targeted and complex savings programs.

Lawmakers in Washington could establish a generous and easily understandable I.R.A. match for a fraction of what it would cost to extend the Bush tax cuts for the wealthy. The evidence in favor of doing so is compelling. Then, when the ideological din abates, a future Congress can enact the reforms that are actually needed to strengthen Social Security after midcentury: modest tax increases and tempered benefit cuts, phased in over decades.

Their suggestion to tax the young more to support a unconsciounable 1930s-era SS system is less moral, but I’m glad they have joined the discussion.

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