WASHINGTON, D.C. - Rep. Dave Brat (R-Va.) introduced H.R. 937, the Universal Savings Account Act with Morgan Griffith (R-Va.) and Trent Franks (R-Ariz.) as original cosponsors. A companion bill, S. 232 was also introduced in the Senate by Sen. Jeff Flake (R-Ariz.).
This legislation will make it easier for Americans to save money by allowing Americans of all income levels to create an account where they can put up to $5,500 per year of post-tax income. These accounts are free of additional taxes.
Approximately 46 percent of Americans say they do not have enough money to cover a $400 emergency expense. Instead, they say they'd be forced to borrow money for an emergency expense on a credit card or from friends and family.
Wealthy Americans can hire experts to find specialized accounts with incentives, but ordinary Americans just struggling to put food on the table or cover a basic emergency expense lack the luxury of that expertise. Instead of being forced to navigate through a complex and serpentine system, this bill removes the double-taxation that hard-working Americans typically face on their savings.
“During my visits with constituents in Virginia’s 7th District, I have heard from countless individuals and families who are struggling to save for their future, let alone for potential emergency expenses,” said Rep. Brat. "This legislation helps put Americans in the drivers seat so they can take control of their savings and reach the sustainable economic future we all seek.”
Sen. Jeff Flake said, “Our tax code shouldn’t penalize savers for accessing their own money when they need it. The USA Act provides consumers with a flexible option to grow their savings tax-free without burdensome federal restrictions.”
This legislation includes the following:
- Allows American adults (citizens and legal permanent residents) to open a tax-free savings account, contribute up to $5,500 after-tax each year, and use withdrawals for any reason at any time.
- Funds can be invested in bonds and equities, and those earnings grow tax free.
- Withdrawals are tax-free and can be recontributed.
- Contributions are not tax deductible.
This legislation has been endorsed by Americans for Tax Reform, the Association of Mature American Citizens, the National Taxpayers Union, and CATO.
A full text of the bill can be viewed here.