WASHINGTON-The rising tide that isn't lifting all boats is drawing attention in this election year and has now resulted in an effort to pass legislation to assist working poor and middle-income Americans begin a savings plan. On February 2, in a press conference held by Senators Joseph Lieberman (D-Conn.) Rick Santorum (R-Pa.) and attended by co-sponsors Sens. Spencer Abraham, (R-Mich.) Diane Feinstein, (D- Calif.) Mary Landreau (D-La.) and other supporting principals, Lieberman and Santorum announced their legislation titled the Savings for Working Families Act of 2000. Prompted, they said, by the fact of a growing disparity of wealth among Americans, the Senators cited recent Federal Reserve statistics that show that despite the (now) longest economic boom in the country's history, many average families are not accumulating assets. Working families are living paycheck to paycheck, said Feinstein, and find it impossible to gain any economic ground. The bill would establish Individual Retirement Accounts (IDAs), at banks, credit unions and other non-profits which would be matched in a similar way to 401 (k) plans. IDAs, said Lieberman,would be matched (dollar-for-dollar) through a federal tax credit. Lieberman introduced a similar measure last year, said CUNA lobbyist Gary Kohn, who spoke of the credit union involvement in the savings initiative. The idea has lived on, and now has taken on greater importance, he said. Kohn added that credit unions are uniquely positioned to offer IDAs and suggested that owing to the (not-for-profit) CU philosophy, the concept could take off. Holders of IDA accounts would be limited to using the funds for certain specific purposes, including buying a first home, for college education or job training programs and starting a business. Once enough funds are accumulated to make the purchase, say, of a home, the account holder must also complete a financial education course provided by the financial institution. Using this two-prong approach of asset accumulation and purposeful financial education (including budgeting and continued savings plans) a disbursement will be given directly to the asset provider. The bill would create two separate kinds of tax credits: * Banks would receive 90% federal credit for every dollar contributed to an IDA, up to $500 in each account and up to $100 million overall. That makes for a maximum tax credit of $450 per account and a total of $90 million per institution. * Contributors in the private sector would receive a 50% investment credit for every dollar contributed, up to $500 per account and up to $10 million overall, making for a cap of $250 per account and $5 million per taxpayer. Lieberman said this methodology harnesses the "creative forces of the marketplace to help secure our core democratic values, holding out the hope of free enterprise without the false promise of a free lunch... in short, it is an approach that speaks to our shared aspirations as Americans." President Clinton spoke of stimulating the savings of Americans in his recent State of the Union speech, albeit in a different context, but Kohn said that the administration had signaled its support of the IDA approach, and felt it would meet with strong support. As to the chances of the passage of the bill, he said that CUNA would direct its strongest effort to passing the legislation. "This will be a priority for us. It's a good fit for credit unions, a natural." Having the support of both Republicans and Democrats it has a decent chance of getting attached to some likely tax package, he said, -
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