Tax Policy

Tax Relief For Savers

The House Ways and Means Committee is scheduled to hold a hearing tomorrow on a bill that would spare millions of Americans from having to pay taxes on savings income. Being seriously considered by Committee Chairman Bill Archer (R-Texas), the proposal is said to have bipartisan support.

  • Individuals would be allowed to exclude from taxable income up to $200 a year of income from stock dividends and interest-bearing accounts.

  • For couples filing jointly, the exclusion would be $400.

  • It would eliminate all taxes on savings and investments for 30 million Americans and cut taxes for 66 million.

  • Savers in the 15 percent tax bracket with $400 in interest and dividends would keep an additional $60 annually, and those in the 28 percent bracket would keep $112.

The plan is estimated to cost $15.2 billion in federal revenues over five years. But it would eliminate the need for small savers to keep detailed records on such savings and declare the earnings on their tax forms.

Source: William M. Welch, "Bill Would Cut Tax on Savings Interest," USA Today, February 11, 1998.

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