Lankford, Colleagues Help Americans Try to Save for Retirement, Emergencies Even in Biden Economy
WASHINGTON, DC – Senators James Lankford (R-OK), Chuck Grassley (R-IA), John Barrasso (R-WY), and Steve Daines (R-MT) today introduced legislation to provide relief and protections for middle class savings that still face federal taxes despite significantly diminished value imposed by historic rates of inflation. The Middle-Class Savings and Investment Act would help lower- and middle-income Americans, their families, and retirees as inflation outpaces any interest earned or gains accrued by their savings through targeted tax relief.
“Oklahomans know it’s good to save money in case of an emergency and for retirement, but Biden’s inflation and record-high, $5-per-gallon or more gasoline are overwhelming families and eating up money they try to save,” said Lankford. “Our bill gives more breathing room from federal taxes on middle class families and retirees so they are able to save more when times are tough.”
“The reckless spending, backwards energy policy and overall economic mismanagement of this administration has led to 40-year high inflation. Unlike other plans, like gas tax rebates or increased taxes on businesses, our legislation will not further fan the fires of inflation,” Grassley said. “Middle class families, retirees, small businesses and farmers have watched as their savings erode in value while still facing taxes on gains that may not even keep pace with inflation. This creates a perverse incentive to spend now rather than save, further fueling inflation. Our bill will ensure that those hurting most from inflation aren’t further burdened by those taxes.”
“The reckless policies of the Biden administration have led to 40-year high inflation that is eating away at the savings of middle-class families, retirees, ranchers and farmers,” said Barrasso. “Historically high gas prices, food prices, and housing costs are emptying the wallets of people in Wyoming and across the country. The Middle-Class Savings and Investment Act helps Americans combat inflation by keeping Uncle Sam out of their pockets.”
“From prices at the grocery store to the gas pump, President Biden’s economy is bankrupting Montana families and making it hard to plan for the future, or even tomorrow. This bill will help give hardworking, middle class Montana families a leg up by expanding tax free investment and retirement savings and will have the added benefit of helping combat inflation,” Daines said.
The Middle-Class Savings and Investment Act would target relief for Americans by:
- Excluding a reasonable amount of interest income from being subject to tax ($600 for married couples, $300 for individuals);
- More than doubling the size of the zero percent (lowest) tax bracket for long-term capital gains and qualified dividends, and indexing the income thresholds to inflation;
- Eliminating the marriage penalty that exists in the current Net Investment Tax—which subjects some income to an additional 3.8 percent tax—and indexing its income threshold to inflation; and
- Increasing the maximum “savers credit” an individual may receive for contributing to qualified retirement accounts and expanding the availability of this credit to more taxpayers.
According to data released by the Bureau of Labor Statistics, the consumer price index (CPI) accelerated last month at the fastest rate in 40 years. The annualized CPI—a critical gauge of inflation—rose 8.6 percent for the 12 months ending in May. This massive increase in inflation amounts to a reduction in consumer purchasing power, squeezing budgets for individuals and families across the country.
Americans who want to save their hard-earned money for the long term have few options to preserve its value in such an environment. Where they can accrue interest or may incur some modest return, they still face federal taxes on those gains under current law. The Middle-Class Savings and Investment Act provides protections and targeted relief for these Americans.
Groups offering support for the bill include Americans for Tax Reform, the National Taxpayers Union, and Americans for Prosperity.