The following letter appeared in Today's Philadelphia Inquirer (eleventh largest average weekly circulation in the country) in reply to an article by Mark Zandi "It's time to address the Wealth Gap." Congratulations to our volunteer State Director, Ken Fody.
---------------------------- Ken wrote:
Tax policy discourages savings
Mark Zandi's article "It's time to address the wealth gap" (Sunday) overlooked a key factor: federal tax policy, which has, for years, punished people for earning and saving and rewarded spending.
Buy a new car and under the "Cash for Clunkers" program you could get a deduction. Buy energy-efficient improvements for your home, get a deduction. Buy a bigger house, get a bigger mortgage-interest deduction. Take out a home-equity loan to buy a 60-inch TV and get a deduction.
On the other hand, if you earn more money you pay higher income taxes. If you save what is left, then the earnings are taxed.
Essentially, the federal government has punished the accumulation of wealth and rewarded dissipation of wealth - policies that affect lower- and middle-income groups more than they do the wealthy.
We need to replace the current, antiquated tax code with a tax policy that encourages and rewards savings and the accumulation of wealth for all income levels. The Fair Tax, a comprehensive tax-reform proposal, would do that and make the United States more competitive with other countries when it comes to attracting jobs and investments.
Kenneth W. Fody, director, Pennsylvania Fair Tax Organization, Red Hill, email@example.com