Missing in the Tax Plan

Before Americans get too giddy over the lower taxes just crafted by their representatives in Congress, they should remember two words often associated with responsible changes in the tax code: simplification and savings.

On both counts, the latest burst of congressional tax writing is a bust.

Remember the tax simplification promises of our politicians one short year ago? True, no one had high hopes for a flat tax or a national sales tax. But we've just been handed the opposite extreme.

The child tax credit sounds simple, but is your income too high, or too low? Where do the phase-outs phase in? Are you ready to fill out the probable new forms?

And the new individual retirement account (IRA) options. The complexity here won't be understanding the choices but figuring out which one really fits your financial situation. While you're at it, don't forget to study the three or four different ways to figure capital gains on your sale of real estate or stocks.

To top it off, some families with moderate incomes and lots of children may find themselves suddenly forced to use the very complicated alternative minimum tax - the IRS's way of assuring that people with many deductions relative to income pay their fair share. Only the wealthy had to deal with that before.

Some critics are dubbing the tax-cut package of 1997 the Full Employment Act for Tax Preparers.

And saving? Well, the expanded IRA choices are supposed to supply incentives to save - which is often seen as a neglected need in the US economy. But IRAs may do little to generate new saving. Instead, well-off people who already have money socked away will simply shift it into the new, higher yielding accounts. The real need is to help people of moderate means get into savings plans.

There will always be a next time for tax changes, however. And by then simplification and saving may have some fresh political currency.

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