Sen. Orrin Hatch, R-Utah, has introduced a bill designed to increase investments by creating tax breaks for interest, dividends and capital gains (the money from the increased value of assets such as stocks or homes).
"The U.S. savings rate is dropping into the danger zone. We cannot expect long-term prosperity without encouraging Americans to save and invest more," Hatch said.His bill would exempt from federal tax the first $2,000 of an individual's interest and dividend income each year.
It would also exempt from federal tax the first $50,000 of an individual's capital gains income each year. It would index capital assets such as homes so that taxes would not be paid on inflationary gains.
"It is just plain wrong to tax gains cause by inflation," Hatch said.
He added his bill would "encourage small investors to save and help average Americans to start new businesses."