USA Accounts Proposal

      Message Creation Date was at 14-APR-1999 12:39:00

TABLE OF CONTENTS




I. 1-Page Description of President ClintonD!,s USA Accounts Proposal

II. Hypothetical Examples of How Families Benefit from President ClintonD!,s
USA Accounts

III. 1-Pager on "the Need for Universal Savings Accounts"

IV. 2-Page Background on President ClintonD!,s USA Accounts


PRESIDENT CLINTON INTRODUCES UNIVERSAL SAVINGS ACCOUNTS: PROVIDING
MILLIONS OF
AMERICANS A NEW OPPORTUNITY TO SAVE FOR RETIREMENT
April 14, 1999

Today, President Clinton announced his Plan to Provide Universal Savings
Accounts for Most Americans. These accounts will give 124 million
Americans the
opportunity to build wealth and to save for their retirement through a
progressive tax cut. A married couple that participated for 40 years,
could
accumulate over $253,680 in todayO!,s dollars -- enough to produce $20,121 a
year of after-tax income in retirement.

Currently, Too Few Americans have Additional Savings.  Because Americans
are
living longer, it is more important than ever for them to build wealth for
a
secure retirement.  Currently, over two-thirds of Americans rely on Social
Security as their principal source of retirement income, and 18 percent
rely on
Social Security as their only source of income. Too few Americans are
saving
for their retirement. The typical family headed by someone 55-64 years of
age
has financial assets worth just $32,000.

president Clinton Believes that Social Security Reform Needs to be
complemented
with Actions to Strengthen Private Savings and Private Pensions. Social
Security reform will ensure that Social Security remains a rock solid
foundation for retirement security. universal Savings Accounts will give
working American families the opportunity to save for a secure retirement.
Under this new program, 73 million people who do not participate in
employer-provided pension plans would qualify for USAs, as well as 51
million
people with pensions.

HereD!,s How USAs Work:

98 million adults would receive an automatic government contribution to
their
Universal Savings Account every year.

In addition to the automatic contribution, the government would match,
dollar
for dollar, voluntary contributions to the USAs by low and moderate income
workers.  Eligible workers with higher incomes would have a match rate of


at
least 50 percent.

USAs Provide a Progressive Approach for Retirement Savings for the
Majority of
Working Americans. The current tax system provides 66 percent of the tax
benefits for pensions and retirement savings to taxpayers with incomes
above
$100,000.   In contrast, the USA proposal would provide 80 percent of its
benefits to families with incomes below $100,000. USAs makes the tax
system
more progressive by providing the most generous tax breaks for low and
middle
income workers-- who are the least likely to have access to employer
pensions
and who have the most difficult time saving.

USAs will Help Make Addi~ional Retirement Savings Universal.  Each spouse
in a
married couple with family earnings over $5,000 and adjusted gross income
of
less than $100,000 who is between the ages of 18 and 70 will be eligible
for a
USA tax credit (single taxpayers must have adjusted gross income below
$50,000;
head of household filers must have income below $75,000).  In addition,
workers
with higher incomes who do not have pension coverage are eligible for an
account.

USAs Allow American Families to Build Wealth to Meet Their Retirement
Needs.
USAs give these workers an opportunity to build wealth and save for
retirement.

A couple earning $40,000 would automatically receive $600 of tax credits
deposited into their accounts, even if this family contributed nothing to
their
accounts.  After 40 years, with only automatic contributions their accounts
would total $76,104 (in todayD!, s dollars) and provide ,$6,036 a year of
after-tax retirement income.

However,   if each year this family saved $700 ($350 in the account of each
spouse),   then the government would provide a $1,300 tax credit ($650 each)
After 40   years they would have wealth totaling over $253,680 in todayD!,s
dollars,   enough to provide $20,1210f after-tax income in retirement.


USA Tax Credits
A Family of Four with an Income of $40,000

Consider a married couple with two children.  One spouse makes $40,000 a
year
working for a small business.  The other spouse stays at home with their
young
children. Like millions of other families, they live paycheck to paycheck.
Before payday, their bank account rarely has more than a couple hundred
dollars.

How the New USA Accounts Work for this Family.    The USA accounts are


designed
to deliver tax credits to help families save and build wealth for their
retirement.   This family would receive:

 Automatic Tax Credit:  Every year the husband and wife would each receive
an
automatic annual tax credit of $300, for a total of $600. They would
claim the
tax credit on their tax return, and it would be deposited in their new USA
accounts.

Matched Tax Cut: As a powerful new incentive to save, this couple would
receive an additional $1 in tax credit for every dollar the couple saved
-- up
to $700 ($350 each) of savings would be matched.  For each dollar the
couple
deposited in their USA accounts, they would receive a corresponding $1 in a
matching tax credit, which would also be deposited in their USA accounts.

This Adds Up to A Big Tax Cut for Retirement Savings and a Great
Investment:
The coupleD!,s $700 of savings would be supplemented by a $1300 tax credit
for a
total of $2000 a year in retirement savings. ThatD!,s $600 credited
automatically ($300 each) plus a $700 savings credit ($350 each). The USA
credit almost triples the coupleD!,s contribution, and it allows for tax
favored
build up of account balances.

The Automatic Tax Credit Provides Core Savings Support
Automatic
Tax Credit      Family Contribution     Matched Tax Cut Total
Annual Savings in USA
$600    $0      $0      $600*

*This savings could build to $76,104 after 40 years -- assuming a 5 percent
real rate of return.

The Matching Tax Cut Provides A Powerful Incentive To Save
Automatic
Tax Credit      Family Contribution     Matched Tax Cut Total
Annual Savings in USA
$600    $700    $700    $2000*

*This will provide a total tax credit of $1,300.

 These savings could build to $253,680 after 40 years   assuming 5 percent
real rate of return. And would provide $20,121 of after-tax income in
every
year of retirement.

Building Wealth for Retirement. Regular savings over a lifetime combined
with
these tax credits will help working families build wealth and retirement
security. If this family saved $700 every year and received the maximum
tax
credit of $1,300, after 40 years they would have a nest egg of wealth
totaling
$253,680 in todayO!,s dollars. This would provide $20,121 of after-tax
income


in every year of retirement from depositing only $700 per year while they
worked.

Benefits of USA Tax Credits Compared to the 10% Across-the-Board Tax Cut.
This
family would receive a much larger tax cut from the USA account tax credits
than from the 10% across-the-board tax cut. While this family would
receive
just $315 from the across-the-board tax cut, they would be eligible to
receive
$1,300 from the USA account tax credits.

USA Tax Credits
A Family of Four with an Income of $60,000

Consider a married couple with two children. One spouse makes $60,000 a
year
working for a small business. The other spouse stays at home with their
young
children. Like millions of other families, they live paycheck to paycheck.
Before payday, their bank account rarely has more than a couple hundred
dollars.

How the New US As Work for this Family. USAs are designed to deliver tax
credits to help families save and build wealth for their retirement.  This
family would receive:

Automatic Tax Credit:  Every year the husband and wife would each receive
an
automatic annual tax credit of $150, for a total of $300. They would
claim the
tax credit on their tax return and it would be deposited in their new USAs.

Matching Tax Credit:  As a powerful new incentive to save, this couple
would
receive an additional $0.75 in tax credit for every dollar the couple
saved
up to $972 ($486 each) of savings would be matched.

This Adds Up to A Big Tax Cut for Retirement Savings and a Great
Investment:
The coupleO!,s $972 of savings would be supplemented by a $1,028 tax credit
for
a total of $2,000 a year in retirement savings. ThatO!,s $300 credited
automatically ($150 each) plus a $728 savings credit ($364 each).  The USA
credit more than doubles the coupleO!,s contribution, and it allows for tax
favored build up of account balances.

The Automatic Tax Credit Provides Core Savings Support
Automatic
Tax Credit      Family Contribution     Matching Tax Credit
Total Annual Savings in USA
$300    $0      $0      $300

*This savings could build to $38,052 after 40 years -- assuming a 5 percent
real rate of return.

The Matching TAX CREDIT Provides A Powerful Incentive To Save
Automatic
Tax Credit      Family Contribution    Matching Tax Credit


Total Annual Savings in USA
$300    $972    $728    $2000*

*This will provide a total tax credit of $1,028.

 These savings could build $253,680 after 40 years    assuming 5 percent
real
rate of return.  And would provide $20,121 of after-tax income in every
year of
retirement.

Building Wealth for Retirement.  Regular savings over a lifetime combined
with
these tax credits will help working families build wealth and retirement
security.  If this family saved $972 every year and received the maximum
tax
credit of $1,028, after 40 years they would have a nest egg of wealth
totaling
$253,680 in todayO!,s dollars. This would provide $20,121 of after-tax
income
in every year of retirement from depositing only $972 per year while they
worked.

Benefits of USA Tax Credits Compared to the 10% Across-the-Board Tax Cut.
This
family would receive a much larger tax cut from the USA account tax credits
than from the 10% across-the-board tax cut. While this family would
receive
just $547 from the across-the-board tax cut, they would be eligible to
receive
$1,028 from the USA account tax credits.

USA Tax Credits
A Family of Four with an Income of $80,000

Consider a married couple with two children. One spouse makes $80,000 a
year
working for a small business. The other spouse stays at home with their
young
children.

HOW the New USAs Work for this Family.  USAs are designed to deliver tax
credits to help families save and build wealth for their retirement.  This
family would receive:

Matching Tax Credit: As a new incentive to save, this couple would
receive an
additional $.50 in tax credit for every dollar the couple saved ~- up to
$1,333
($667 each) of savings would be matched.

This Adds Up to A Big Tax Cut for Retirement Savings and a Great
Investment:
The coupleO!,s $1,333 of savings would be supplemented by a $667 tax credit
for
a total of $2,000 a year in retirement savings. ThatO!,s a $667 savings
credit
($333 each).  The USA credit increases the coupleO!,s contribution, and it
allows for tax favored build up of account balances.


At this income level the Automatic tax credit is not available
Automatic Tax Credit    Family Contribution     Matching Tax
Credit Total Annual Savings
in USA
$0      $0      $0      $0


The Matching Tax Cut Provides A Powerful Incentive To Save
Automatic Tax Credit    Family Contribution     Matching Tax
Credit Total Annual Savings
in USA
$0      $1,333 $667     $2000*

 *This will provide a total tax credit of $667.

 These savings could build $253,680 after 40 years   assuming 5 percent
real
rate of return. And would provide $20,121 of after-tax income in every
year of
retirement.

Building Wealth for Retirement. Regular savings over a lifetime combined
with
these tax credits will help working families build wealth and retirement
security.  If this family saved $1,333 every year and received the maximum
tax
credit of $667, after 40 years they would have a nest egg of wealth
totaling
$253,680 in todayD!,s dollars. This would provide $20,121 of after-tax
income
in every year of retirement from depositing only $1,333 per year while they
worked.


Benefits of USA Tax Credits Compared to the 10% Across-the-Board Tax Cut.
This
family would receive $947 from a 10% across-the-board tax cut. At first
glance, this might seem to be somewhat larger than the $667 USA tax credit.
However, the USA also provides for tax-free compounding of account
balances,
making the tax credit worth well over $1000 to this family.

THE NEED FOR USAs
Making Savings For A Secure Retirement Available to More Americans

Currently, Too Few Americans Have Enough Savings For A Secure Retirement.
Because Americans are living longer it is more important than ever for
them to
build the wealth necessary for a secure retirement.  But there are gaps in
the
system that leave too many American families behind.

Social Security Provides A Core Foundation For Retirement And Reform is
Necessary To Keep It Strong, But It Is Only One Leg of The Retirement
Stool.
While providing basic economic security for older Americans, the program
was
never meant to provide enough to maintain the standard of living
individuals
had during their working years. Social Security replaces just one-half of


pre-retirement income for an individual who earned $17,000, and less than
one-quarter of the income of an individual who earned $72,600. Yet Social
Security is the only source of income for 18 percent of elderly Americans,
and
the principal source of income for 66 percent of elderly Americans.

Pension Coverage Provides Additional Support, But Many American Workers
Are Not
Covered.

-- Half   of all American workers have no pension coverage at all through
their
current   job. This situation is worse for workers in small businesses, where
only 18   percent of people who work for organizations employing fewer than
25
workers   have access to pensions through their current job.

-- Less than 20 percent of workers have their own IRA, and many do not
contribute regularly.

-- Just one quarter of all workers are covered by 401(k) plans in their
current
job. And while two-thirds of people with earnings $75,000 and over have
401(k)s,  just 43 percent of those with earnings between $35,000 and
$39,000
have 401(k)s.

-- While 91 percent of all families have some financial holdings, the
median
value of these holdings is just $13,000.  The median value of financial
assets
of families headed by someone over age 65 is just $20,000.

The Tax Incentives For Retirement Savings Help Many American Families, But
The
Tax Benefits Are Skewed To The Better Off.

Two thirds of existing pension tax subsidies go to families with incomes
over
$100,000, while just one third goes to those making under $100,000 and
just 7
percent goes to families earning less than $50,000.
USA Accounts provide a progressive tax credit so that the overall
retirement
system will be more balanced and give all American families an incentive to
save.

80 percent of the tax benefits of USA Accounts go to those making under
$100,000.


SUMMARY OF UNIVERSAL SAVINGS ACCOUNT PROPOSAL


Universal.Savings Accounts (USAs) are voluntary individual retirement
savings
accounts with a progressive tax subsidy.

Automatic Government Contribution. Workers and their spouses in low- or
moderate-income households receive an automatic government contribution of


$300, in the form of a refundable tax   credit deposited directly into their
USAs. The automatic credit is phased    out between $40,000 and $80,000 of
adjusted gross income (AGI) for joint   filers ($20,000-$40,000 for singles;
$30,000-$50,000 for head of household   filers).

Government Match of Individual Contributions.   Voluntary individual
contributions to a USA are matched by additional government contributions
to
the taxpayerD!,s USA. The matches will also be in the form of a refundable
tax
credit deposited directly into the USA. Low- and moderate-income
individuals
receive a dollar-for-dollar match. The match rate phases down to 50
percent
over the same income ranges as the phase-down for the automatic
contribution,
and then remains at 50 percent until the income level at which eligibility
ends
($100,000 for joint filers with pension coverage; $50,000 for single filers
with pension coverage; $75,000 for head of household filers with pension
coverage; no limit for people without pension coverage). Total
contributions
(including the credit) to an account are capped at $1,000 per year.

Eligibility. To be eligible, a taxpayer must have at least $5,000 of
earnings
(which can be combined earnings on a joint return) and must not be the
dependent of another taxpayer. Thus, an individual without earnings can
have a
USA if his or her spouse earns at least $5,000.   Taxpayers younger than
age 18
or older than 70 are ineligible. Taxpayers with an employer-sponsored
retirement plan must have AGI of less than $100,000 for joint filers
($50,000
for single filers; $75,000 for head of household filers).   All eligible
workers
without an employer-provided. pension would receive at least a 50 percent
match,
regardless of income.

Investment Choice.   Individuals will have the option of investing their
accounts in a universal retirement plan similar to the Federal Thrift
savings
plan (TSP) , a 401(k)-type plan for federal government employees.
Individuals
would be able to choose among a limited number of broad-based investment
options similar to those offered in the TSP and in many private sector
401(k)
plans. We look forward to working with Congress and experts from the
private
sector to devise the best way to administer the accounts, as well as to
explore
whether it would be possible to provide account holders with the option of
investing directly with private sector fund managers.

withdrawal Rules.   No amount could be withdrawn from a USA before age 65,
unless the account holder dies. Once withdrawals commence after age 64, no
additional contributions could be made to the account.

Tax Treatment of Accounts.   Automatic and matching government contributions


would not be taxable when deposited to accounts.   Earnings would grow tax
free
until retirement. Withdrawals would generally be taxable, but 15 percent
of
each withdrawal would be excluded from taxes in order to approximate a
tax-free
return of an individual's own contribution. Voluntary USA contributions
will
not be tax deductible because the tax subsidy is provided in the form of
the
tax credit rather than a deduction, enabling the program to be more
progressive.
 Coordination with 401(k)-type Plans.   Eligible employees will receive a
government matching contribution deposited to their USA when they
contribute
either to their USA or to a 401(k)-type plan. The government match
supplements any employer matching contributions. Therefore, USAs will not
cause workers to shift contributions from private-sector 401(k)-type plans
to
USAs.   In fact, USAs will encourage workers to save through 401(k)-type
plans
by giving the millions of workers who are currently eligible to
contribute, but
who fail to do so, a greater incentive to contribute without imposing
administrative burdens on employers or plan administrators.   Because
contributions to a 401(k)-type plan are excludable from taxable income
while
USA contributions are not, joint filers with AGI of more than $50,000
($25,000
for single filers; $37,500 for head of household filers) who elect to
receive
government matches will be required to include in taxable income 80
percent of
the portion of the 401(k) contribution that is matched.

Protections for Women Including Divorcees and Widows.  The design of USAs
recognizes that women are more likely to spend time out of the labor force
than
men and have lower average earnings than men, and ensures women will have
the
opportunity to accumulate significant savings in their USAs.  First,
spouses of
workers are eligible for the USA tax credit even if they do not work.
second,
the progressive credit formula targets the tax benefits to low and moderate
income workers. We look forward to working with Congress and outside
experts
to determine what the best means are to ensure that women are protected in
case
of divorce or widowhood.

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                                               April 14, 1999
                                                              ~~~~                         ,~
                                                                                                              I
         AMERICANS A NEW OPPORTUNITY TO SAVE FOR
                       RETIREMENT
Today, President Clinton announced his Plan to Provide Universal Savings Accounts for Most Americans. These
accounts will give 124 million Americans the opportunity to build wealth and to save for their retirement through a
progressive tax cut. A married couple that participated for 40 years, could accumulate over $253,680 in today's dollars
-- enough to produce $20,121 a year of after-tax income in retirement.

Currently, Too Few Americans have Additional Savings. Because Americans are living longer, it is more important
than ever for them to build wealth for a secure retirement. Currently, over two-thirds of Americans rely on Social
Security as their principal source of retirement income, and 18 percent rely on Social Security as their only source of
income. Too few Americans are saving for their retirement. The typical family headed by someone 55-64 years of age
has financial assets worth just $32,000.

President Clinton Believes that Social Security Reform Needs to be Complemented with Actions to Strengthen
Private Savings and Private Pensions. Social Security reform will ensure that Social Security remains a rock solid
foundation for retirement security. Universal Savings Accounts will give working American families the opportunity to
save for a secure retirement. Under this new program, 73 million people who do not participate in
employer-provided pension plans would qualify for USAs, as well as 51 million people with pensions.

Here's How USAs Work:

        98 million adults would receive an automatic government contribution to their Universal Savings Account every
        year.

        In addition to the automatic contribution, the government would match, dollar for dollar, voluntary contributions
        to the USAs by low and moderate income workers. Eligible workers with higher incomes would have a match
        rate of at least 50 percent.

USAs Provide a Progressive Approach for Retirement Savings for the Majority of Working Americans. The
current tax system provides 66 percent of the tax benefits for pensions and retirement savings to taxpayers with incomes
above $100,000. In contrast, the USA proposal would provide 80 percent of its benefits to families with incomes below
$\00,000. USAs makes the tax system more progressive by providing the most generous tax breaks for low and middle
income workers-- who are the least likely to have access to employer pensions and who have the most difficult time
saving.

USAs Will Help Make Additional Retirement Savings Universal. Each spouse in a married couple with family
earnings over $5,000 and adjusted gross income ofless than $100,000 who is between the ages of 18 and 70 will be
eligible for a.USA tax credit (single taxpayers must have adjusted gross income below $50,000; head of household filers
must have income below $75,000). In addition, workers with higher incomes who do not have pension coverage are
eligible for an account.

USAs Allow American Families to Build Wealth to Meet Their Retirement Needs. USAs give these workers an
opportunity to build wealth and save for retirement.

        A couple earning $40,000 would automatically receive $600 of tax credits deposited into their accounts, even if
        this family contributed nothing to their accounts. After 40 years, with only automatic contributions their
        accounts would total $76,104 (in today's dollars) and provide $6,036 a year of after-tax retirement income.

        However, if each year this family saved $700 ($350 in the account of each spouse), then the government
        would provide a $1,300 tax credit ($650 each), After 40 years they would have wealth totaling over
        $253,680 in today's dollars, enough to provide $20,1210f after-tax income in retirement.




                                                                             Automated Records Management System
                                                                             Hex-Dump Conversion

Universal Savings Accounts (USAs) are voluntary individual retirement savings accounts with a
progressive tax subsidy.

 Automatic Government Contribution. Workers and their spouses in low- or moderate-income
households receive an automatic government contribution of $300, in the form of a refundable tax credit
deposited directly into their USAs. The automatic credit is phased out between $40,000 and $80,000 of
adjusted gross income (AGI) for joint filers ($20,000-$40,000 for singles; $30,000-$50,000 for head of
household filers).

  Government Match of Individual Contributions. Voluntary individual contributions to a USA are
matched by additional government contributions to the taxpayer's USA. The matches will also be in the
form of a refundable tax credit deposited directly into the USA. Low- and moderate-income individuals
receive a dollar-for-dollar match. The match rate phases down to 50 percent over the same income
ranges as the phase-down for the automatic contribution, and then remains at 50 percent until the income
level at which eligibility ends ($100,000 for joint filers with pension coverage; $50,000 for single filers
with pension coverage; $75,000 for head of household filers with pension coverage; no limit for people
without pension coverage). Total contributions (including the credit) to an account are capped at $1,000
per year.

_Eligibility. To be eligible, a taxpayer must have at least $5,000 of earnings (which can be combined
earnings on a joint return) and must not be the dependent of another taxpayer. Thus, an individual
without earnings can have a USA ifhis or her spouse earns at least $5,000. Taxpayers younger than age
18 or older than 70 are ineligible. Taxpayers with an employer-sponsored retirement plan must have AGI
ofless than $100,000 for joint filers ($50,000 for single filers; $75,000 for head of household filers). All
eligible workers without an employer-provided pension would receive at least a 50 percent match,
regardless of income.

  Investment Choice. Individuals will have the option of investing their accounts in a universal
~etirement plan similar to the Federal Thrift Savings Plan (TSP), a 401(k)-type plan for federal
government employees. Individuals would be able to choose among a limited number of broad-based
investment options similar to those offered in the TSP and in many private sector 40l(k) plans. We look
forward to working with Congress and experts from the private sector to devise the best way to administer
the accounts, as well as to explore whether it would be possible to provide account holders with the
option of investing directly with private sector fund managers.

 Withdrawal Rules. No amount could be withdrawn from a USA before age 65, unless the account
holder dies. Once withdrawals commence after age 64, no additional contributions could be made to the
account.

_Tax Treatment of Accounts. Automatic and matching government contributions would not be taxable
when deposited to accounts. Earnings would grow tax free until retirement. Withdrawals would
generally be taxable, but 15 percent of each withdrawal would be excluded from taxes in order to
approximate a tax-free return of an individual's own contribution. Voluntary USA contributions will not
be tax deductible because the tax subsidy is provided in the form of the tax credit rather than a deduction,
enabling the program to be more progressive.
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contribution deposited to their USA when they contribute either to their USA or to a 401 (k)-type plan.
The government match supplements any employer matching contributions. Therefore, USAs will not
cause workers to shift contributions from private-sector 401(k)-type plans to USAs. In fact, USAs will
encourage workers to save through 401 (k)-type plans by giving the millions of workers who are currently
eligible to contribute, but who fail to do so, a greater incentive to contribute without imposing
administrative burdens on employers or plan administrators. Because contributions to a 401 (k)-type plan
are excludable from taxable income while USA contributions are not, joint filers with AGI of more than
$50,000 ($25,000 for single filers; $37,500 for head of household filers) who elect to receive government
matches will be required to include in taxable income 80 percent of the portion of the 401(k) contribution
that is matched.

  Protections for Women Including Divorcees and Widows. The design of USAs recognizes that
;omen are more likely to spend time out of the labor force than men and have lower average earnings
than men, and ensures women will have the opportunity to accumulate significant savings in their USAs.
First, spouses of workers are eligible for the USA tax credit even if they do not work. Second, the
progressive credit formula targets the tax benefits to low and moderate income workers. We look
forward to working with Congress and outside experts to determine what the best means are to ensure that
women are protected in case of divorce or widowhood.




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                         A Family of Four with an Income of $40,000

Consider a married couple with two children. One spouse makes $40.000 a year working for a small business.
 The other spouse stays at home with their young children. Like millions of other families. they live paycheck
to paycheck. Before payday. their bank account rarely has more than a couple hundred dollars.

How the New USA Accounts Work for this Family. The USA accounts are designed to deliver tax
credits to help families save and build wealth for their retirement.   This family would receive:
    Automatic Tax Credit: Every year the husband and wife would each receive an automatic annual tax
    credit of $300, for a total of $600. They would claim the tax credit on their tax return, and it would be
    deposited in their new USA accounts.
   Matched Tax Cut: As a powerful new incentive to save, this couple would receive an additional $1 in tax
    credit for every dollar the couple saved -- up to $700 ($350 each) of savings would be matched. For each
    dollar the couple deposited in their USA accounts, they would receive a corresponding $1 in a matching tax
    credit, which would also be deposited in their USA accounts.
    This Adds Up to A Big Tax Cut for Retirement Savings and a Great Investment: The couple's $700 of
    savings would be supplemented by a $l300 tax credit for a total of$2000 a year in retirement savings.
    That's $600 credited automatically ($300 each) plus a $700 savings credit ($350 each). The USA credit
    almost triples the couple's contribution, and it allows for tax favored build up of account balances.

                    THE AUTOMATIC TAX CREDIT PROVIDES CORE SAVINGS SUPPORT

      Automatic           Family Contribution        Matched Tax Cut          Total Annual Savings in USA
      Tax Credit
          $600                      $0                        $0                           $600
   ThIS savmgs could buIld to $76,104 after 40 years -- assummg a 5 percent real rate of return.

                 THE MATCHING TAX CUT PROVIDES A POWERFUL INCENTIVE TO SAVE

      Automatic           Family Contribution        Matched Tax Cut          Total Annual Savings in USA
      Tax Credit
          $600                     $700                     $700                          $2000
   ThIS WIll provIde a total tax credIt of $1 ,300.
   These savings could build to $253,680 after 40 years -- assuming 5 percent real rate of return.
   And would provide $20,121 of after-tax income in every year of retirement.

Building Wealth for Retirement. Regular savings over a lifetime combined with these tax credits
will help working families build wealth and retirement security. If this family saved $700 every year and
received the maximum tax credit of $1 ,300, after 40 years they would have a nest egg of wealth totaling
$253,680 in today's dollars. This would provide $20,121 of after-tax income in every year of retirement
from depositing only $700 per year while they worked.

Benefits of USA Tax Credits Compared to the 10% Across-the-Board Tax Cut. This
family would receive a much larger tax cut from the USA account tax credits than from the 10%
across-the-board tax cut. While this family would receive just $315 from the across-the-board tax
cut, they would be eligible to receive $1,300 from the USA account tax credits.
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                                                                                    '"'   r',       ;"n

                                     USA Tax Credits
                        A Family of Four with an Income of $60,000
Consider a married couple with two children. One spouse makes $60,000 a year workingfor a small
business. The other spouse stays at home with their young children. Like millions of other families,
they live paycheck to paycheck. Before payday, their bank account rarely has more than a couple
hundred dollars.

How the New USAs Work for this Family. USAs are designed to deliver tax credits to help
families save and build wealth for their retirement. This family would receive:

       Automatic Tax Credit: Every year the husband and wife would each receive an automatic
       annual tax credit of $150, for a total of $300. They would claim the tax credit on their tax
       return and it would be deposited in their new USAs.
       Matching Tax Credit: As a powerful new incentive to save, this couple would receive an
       additional $0.75 in tax credit for every dollar the couple saved -- up to $972 ($486 each) of
       savings would be matched.
       This Adds Up to A Big Tax Cut for Retirement Savings and a Great Investment: The
       couple's $972 of savings would be supplemented by a $1,028 tax credit for a total of$2,000 a
       year in retirement savings. That's $300 credited automatically ($150 each) plus a $728 savings
       credit ($364 each). The USA credit more than doubles the couple's contribution, and it allows
       for tax favored build up of account balances.

                  THE AUTOMATIC TAX CREDIT PROVIDES CORE SAVINGS SUPPORT

      Automatic             Family Contribution           Matching Tax Credit     Total Annual Savings in
      Tax Credit                                                                           USA
         $300                     $0                       $0                       $300
       ThIS savmgs could bUIld to $38,052 after 40 years -- assummg a 5 percent real rate of return.

             THE MATCHING TAX CREDIT PROVIDES A POWERFUL INCENTIVE To SAVE

      Automatic             Family Contribution           Matching Tax Credit     Total Annual Savings in
      Tax Credit                                                                           USA
         $300                         $972                       $728                           $2000
       This will proVide a total tax credit of $1 ,028.
       These savings could build $253,680 after 40 years -- assuming 5 percent real rate of return.
       And would provide $20,121 of after-tax income in every year of retirement.

Building Wealth for Retirement. Regular savings over a lifetime combined with these tax
credits will help working families build wealth and retirement security. If this family saved $972
every year and received the maximum tax credit of $1 ,028, after 40 years they would have a nest egg of
wealth totaling $253,680 in today's dollars. This would provide $20,121 of after-tax income in every
year of retirement from depositing only $972 per year while they worked.

Benefits of USA Tax Credits Compared to the 10% Across-the-Board Tax Cut.
This family would receive a much larger tax cut from the USA account tax credits than from the
10% across-the-board tax cut. While this family would receive just $547 from the
across-the-board tax cut, they would be eligible to receive $1,028 from the USA account tax
credits.

                                                USA Tax Credits
Consider a married couple with two children. One spouse makes $80. 000 a year working for a small
business. The other spouse stays at home with their young children.

How the New USAs Work for this Family. USAs are designed to deliver tax credits to help
families save and build wealth for their retirement. This family would receive:
       Matching Tax Credit: As a new incentive to save, this couple would receive an additional
       $.50 in tax credit for every dollar the couple saved -- up to $1,333 ($667 each) of savings would
       be matched.
       This Adds Up to A Big Tax Cut for Retirement Savings and a Great Investment: The
       couple's $1,333 of savings would be supplemented by a $667 tax credit for a total of$2,000 a
       year in retirement savings. That's a $667 savings credit ($333 each). The USA credit
       increases the couple's contribution, and it allows for tax favored build up of account balances.

               AT THIS INCOME LEVEL THE AUTOMATIC TAX CREDIT IS NOT AVAILABLE
    Automatic Tax        Family Contribution      Matching Tax Credit       Total Annual Savings in
        Credit                                                                       USA
          $0                       $0                       $0                          $0


               THE MATCHING TAX CUT PROVIDES A POWERFUL INCENTIVE To SAVE
    Automatic Tax        Family Contribution      Matching Tax Credit        Total Annual Savings in
        Credit                                                                        USA
          $0                         $1,333              $667                        $2000
       This Will prOVide a total tax credit of $667.
       These savings could build $253,680 after 40 years -- assuming 5 percent real rate ofretum.
       And would provide $20,121 of after-tax income in every year of retirement.

Building Wealth for Retirement. Regular savings over a lifetime combined with these tax
credits will help working families build wealth and retirement security. If this family saved $1,333
every year and received the maximum tax credit of $667, after 40 years they would have a nest egg of
wealth totaling $253,680 in today's dollars. This would provide $20,121 of after-tax income in every
year of retirement from depositing only $1,333 per year while they worked.


Benefits of USA Tax Credits Compared to the 10% Across-the-Board Tax Cut.
This family would receive $947 from a 10% across-the-board tax cut. At first glance, this might
seem to be somewhat larger than the $667 USA tax credit. However, the USA also provides for
tax-free compounding of account balances, making the tax credit worth well over $1000 to this
family.




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                     Making Savings For A Secure Retirement Available to More Americans

      Currently, Too Few Americans Have Enough Savings For A Secure Retirement. Because
      Americans are living longer it is more important than ever for them to build the wealth necessary for a
      secure retirement. But there are gaps in the system that leave too many American families behind.

             Social Security Provides A Core Foundation For Retirement And Reform is Necessary To
             Keep It Strong, But It Is Only One Leg of The Retirement Stool. While providing basic
             economic security for older Americans, the program was never meant to provide enough to
             maintain the standard of living individuals had during their working years. Social Security
             replaces just one-half of pre-retirement income for an individual who earned $17,000, and less
             than one-quarter of the income of an individual who earned $72,600. Yet Social Security is
             the only source of income for 18 percent of elderly Americans, and the principal source of
             income for 66 percent of elderly Americans.

             Pension Coverage Provides Additional Support, But Many American Workers Are Not
             Covered.

                    Half of all American workers have no pension coverage at all through their current job.
                    This situation is worse for workers in small businesses, where only 18 percent of people
                    who work for organizations employing fewer than 25 workers have access to pensions
                    through their current job.

                    Less than 20 percent of workers have their own IRA, and many do not contribute
                    regularly.

                    Just one quarter of all workers are covered by 401(k) plans in their current job. And
                    while two-thirds of people with earnings $75,000 and over have 401 (k)s, just 43
                    percent of those with earnings between $35,000 and $39,000 have 401 (k)s.

                    While 91 percent of all families have some financial holdings, the median value of these
                    holdings is just $13,000. The median value of financial assets of families headed by
                    someone over age 65 is just $20,000.

      The Tax Incentives For Retirement Savings Help Many American Families, But The Tax
      Benefits Are Skewed To The Better Off.

            Two thirds of existing pension tax subsidies go to families with incomes over $100,000, while
             just one third goes to those making under $100,000 and just 7 percent goes to families earning
             less than $50,000.

      USA Accounts provide a progressive tax credit so that the overall retirement system will be more
      balanced and give all American families an incentive to save.

            80 percent of the tax benefits of USA Accounts go to those making under $100,000.
\ .




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EMAILS RECEIVED
ARMS - BOX 093 - FOLDER -008


[04/19/1999]