By Rob Schwarzwalder Published on January 30, 2019

The power to tax is the power to destroy. If Daniel Webster was right about that, come April 15, we’ll be in for a lot of havoc. Because the federal tax code makes a bowl of spaghetti look like a masterpiece of organization.

Just about no one really understands the federal tax code. Including, I suspect, most of the people in the IRS. One answer? USAs.

Taxes and Tax Cuts

Uncle Sam does a lot of things that go well beyond what the Constitution envisions should be its duties. Many things, from various Cabinet departments to the entitlement programs many Americans cherish, should become state functions. Other things should be consolidated so there’s not so much overlap in what Washington does. There are always efficiencies that can be brought to bear in places like the Defense Department.

But granting that, government is still expensive. No one likes to pay taxes, but the federal government can’t fulfill its constitutional duties without public monies. And that’s where taxes come in.

When people can keep more of what they earn, they spend, invest, and save. That means growth in incomes. That helps fill the government’s coffers.

GOP Congressman Kevin Brady of Texas, then-chairman of the House Ways and Means Committee, did great work in putting the nuts and bolts of the tax reduction bill together. The president and his team advanced the bill with a full-court press and Trump then signed it into law on December 22, 2017.

It has had a hugely positive affect on the economy. As explained in Investor’s Business Daily, “Early last year, for example, the Congressional Budget Office’s pre-tax-cut forecast had 2018 growth at just 2% and the unemployment rate at 4.4%. GDP growth is well ahead of that pace, and the unemployment rate is just 3.7%.”

Putting it even more simply, when companies, families, and individuals are allowed to keep more of what they earn, they spend, invest, and save. That means growth in incomes. Higher income also helps fill the government’s tax coffers.

This is basic economics. It still eludes the national Democratic Party. They see people as victims who need to be protected by the clumsy arm of the government, instead of resourceful and energetic citizens who need opportunity.

Holding Us Back

But the tax code that makes a bowl of spaghetti look like a masterpiece of organization? It prevents the kind of growth we need.

The federal code is 2,600 pages long. Combined with the caselaw, statutory code, and a bundle of regulations and rulings on revenue matters that accompany it, the total runs to 70,000 pages. The Tax Foundation found that in 2016, Americans spent more than 8.9 billion hours trying to follow IRS tax requirements in 2016 and that the total cost of fulfilling the IRS’s rules cut into our economy to the tune of $409 billion.

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Again, hats off to Donald Trump and Kevin Brady for taking strides to make the federal code simpler in their bill. The IRS has estimated that “the average time to complete an individual tax return will decrease by 4 to 7 percent. Converting this to dollar terms, we estimate compliance savings could range from $3.1 billion to $5.4 billion.”

Modernize Savings

But more needs to be done. And one of them is modernizing the way Americans save. The IRS lists 15 categories of retirement accounts. This wide variety of accounts is well-intended — it’s supposed to encourage savings through customized accounts — but it’s also confusing and unneeded. As the Heritage Foundation notes, “The patchwork of rules discourages saving and subdivides individual’s savings into multiple accounts, often marooned with past employers.”

That’s why a Universal Savings Account (USA) is an idea whose time has come. The Brits and Canadians have had USAs for years and have found them highly effective. USAs are designed to help people save — not just for retirement, but for any purpose. Everyone is eligible to use one. There’s no age or income limit. And there is no penalty for early withdrawal. You simply put after-tax money (up to a certain amount annually) into your account. Then, as you need to, withdraw it tax-free.

“The simplicity of having only one account encourages savings, all savings, not just the type favored by the government at the time,” explains Veronique de Rugy of the Mercatus Center. “Also, the key to these accounts is that all earnings grow tax-free and can be withdrawn at any time for any reason, free of taxes and penalties.”

USAs were included in a tax bill passed in the House this past September, but the Senate took no action. And now, with Democrats in charge of the House, it’s unlikely we’ll see action soon.


It’s time for conservatives to urge enactment of savings incentives that will create opportunity, strengthen families, and give people more say in how they manage their incomes. Of course, that means less dependency on government, which makes USAs pretty unpalatable to a lot of Democrats.

You never win an argument you don’t make. When it comes to USAs, let’s start the debate. And begin limiting “the power to destroy” even more.

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