European Stars And Stripes (Newspaper) - July 15, 1986, Darmstadt, Hesse                                Tuesday july 15, 1986 the stars and stripes Page 3 residents of Saint la France put in the final few pieces of Whit is reputed id puzzling undertaking in France be the world s or gust Jigsaw Puzzle. The Puzzle Sel up in the gymnasium of local school measures Over 48 feel by 82 feet and consists of More than 150,000 a photo pieces. It depicts Young people dancing in � ring around a tree. Proposed loss of Ira deduction stirs ire Washington a congressional offices Are reporting heavy mail these Days urging members Noi to change one of the most popular tax shelters Ever Given to americans who can afford to use it the individual retirement account in an Era when lobby groups and Trade associations can and do generate mail to Congress through scare tactic and campaigns and fill in Lac Blank Post cards inc save the Ira movement is genuine. This is dearly not orchestrated says Willie Blacklow a spokesman at rep. George Miller a Calif. These people Are outraged. They re writing their own let ters.1 there is not a lot of in Ira drum beating by groups Hie sayings institutions and Mutual funds which Nold huge amounts of Ira Money and could be affected if a Senate tax revision plan to rein in the lax shelter becomes Law. Banks and savings and Loans have other priorities in the tax debate the first being to keep their write offs for the Money they set aside for bad debts. There s Only so Many things you can lobby on says Kirk Williamson of the american Bankets association. You Don t need special interests says sen. William Roth a Del a leading Ira Champion. This Isa populist  iras have been around for 12 years initially created in 1974 to give people not covered by employer pension plans a Chance to save for retirement by sheltering some of their income from imme Diate taxation. By the end of 1981, some $26.7 billion had been slashed in some 3,4 million Ras according to the Ira reporter which is published in Cleveland. The dam broke in 1982, after con Gress made Ira write offs a Universal tax shelter offering the Bounty to All work ing people corporate executives and counter clerks alike. All it takes to claim the tax shelter is the ability to put some Money As much As 12,000 a year into a savings or invest men account. The Money de posited is shielded from taxes and so is the interest it earns. The Money enjoys this favored status until the Saver reaches at least age i9w. When the Saver withdraws his funds both the principal and interest Are subject to taxes. Married couples in which one spouse docs not work May Salt away ,2io a year when both work they can put up to $4,000 in their iras. The Public knew a bargain when it saw it. Today the Ira reporter estimates the amount of Money in iras has reached $249,7 billion and is growing by about $35 billion each year. Estimates of the number of people with Ras Range from 28 million to 35 million. Little wonder that mail is arriving to protest the provision in the Senate tax Revi Sion Bill that would eliminate the deductibility Olra deposits for people with com Pany pension plans while keeping interest earnings tax free until withdrawal. The House passed Bill retains Ira deductibility. When Senate negotiators sit Down with their counterparts from Ibe House the prospects appear Good that iras will survive the tax revision pro Cess and remain universally available. A key indicator is that there seems to be no one on Capitol Hill who will stand up and say that iras per be Are a tax scam that needs curbing. Instead critics Tike Senate majority Leader Bob Dole r-kan., and finance committee chairman Bob Packwood r ore., argue that gelling rid of Ira deductibility is a necessary Trade off for other Mas Sive tax Law changes in the Senate Bill. But Dole and Packwood who will head he Senate negotiators were among the % senators who voted for a non binding Resolution instructing the negotiators to work to retain iras in talks with the House. There s a moral commitment says Roth who sponsored the Resolution. The chief House negotiator. Rep. Dan Rostenkowski d-lll., has said he will work to improve the Senate Bill s treat ment of Middle class taxpayers. Jim Jarufe a spokesman for the House ways and Means committee says retention of iras is one Way to do this. And As the tax negotiators prepare to open talks the Reagan administration is saying it could support some sort of Ira deductibility in the final Bill if a irad Colt is necessary to preserve the Senate plan slower tax rates. There is Strong political support for doing something about iras Treasury Secretary James Baker said sunday on Abc to s this week with David  our position is we would be willing to give on iras. In order to preserve these Low Rales because on balance the Low rates Are More important than those other things Baker said echoing Simi Lar statements last week by while House chief of staff Donald Regan the Senate finance committee Esti mates that continuing full Ira deductibility will Cost the Treasury $26 billion Over the next five years. This Money the reasoning goes could be better spent lowering tax rates for eight out of 10 taxpayers who would Benefit under these Nale Bill. Four years ago when it backed Broad ening of Ira eligibility the committee said n was concerned that people weren t saving enough Money for retirement and faced a drop in living standards when they left the work Force. This year the committee supported ending Universal deductibility of Ras with the reasoning that the expanded availability of iras has had no Discerni ble Impact on the level of aggregate per Sonal  this View is shared by Paul vol alter chairman of the Federal Reserve Board but other economists disagree saying thai iras even with the lost taxes Are valuable because they stimulate savings and provide important seed Money for general growth in the Economy. Martin Feldstein formerly president Reagan s chief economic adviser says that because of their role in capital for mation it would be a great pity to limit iras. Neither the finance committee nor the Federal Reserve Board has researched the effect of iras on the nation s personal Sav Ings rate which stood at 7.s percent of Dis Posable income in 1931 and dropped to a Low of 4,6 percent last year. But David Wise and Steven Venti of the National Bureau of economic research in Cambridge mass say their research shows that the Persona savings Rale would have been even lower without iras Wise a Harvard professor estimated in a Telephone interview that inc savings rate could be 20 percent less if iras had t been broadened in 1981. Ending Universal deductibility Oflas is silly absolutely silly Wise said. I would think one should be thinking about increasing the  higher limits were pro posed in Early lax plans drafted by the Treasury which is taking no position on the Issue of restricting iras. Wise also disputes arguments used in the Senate debate that iras chiefly Bene fit the Rich because poor people can t afford to Sel aside Money for retirement. He says that 69 percent of the contributors to Ira accounts have annual in comes below 190,000, with 54 percent earning under $40,000, below s20.000, the percentage drops to 17. Sen. Bill Bradley in j., one of four senators voting against the Roth Resolution takes the position that Congress in Light budget limes can help More tax payers by limiting iras and using the savings in other areas. He says the latest internal Revenue service figures show that in 1983, 40 percent of the Ira deductions were claimed by people making $40,000 or More a year. A contributor with Anunder-s30,000 income got next to no tax break because this person put an average of Only si40 into an Ira that year according to Bradley