Personal retirement accounts and IRS simplicity

The current administration has proposed a 58% increase in company premiums to help cover the PBGC's current $23 billion deficit. Since the PBGC is taking over the pilots' pension plan of United Airlines and will soon have all of US Airways' pensions, just as in recent years it took over many from the steel industry, we can probably look forward to more of the same as the government (read taxpayers) take the pipe for past efforts of large companies to attempt to escape from past poor negotiating decisions that now leads them to seek such poorly disguised corporate bailout schemes. This was certainly not the government's intent when the PBGC was conceived and implemented, but the reality is undeniable.

We could all participate in another round of finger pointing but I am more interested in candle lighting to alleviate further such situations. I am poorly educated in government financial matters so I tend to think in elemental and basic terms and concepts. So, given the Bush's administration affinity towards "ownership" or personal accounts, combined with an aversion to increased taxes and even their simplification why not this: double, at least, the current limits for legal contributions to 401k accounts and or IRA accounts? Additionally, given America's extremely low personal saving rate, why not add incentives to encourage a higher rate of saving like allowing all IRA's contributions the 401k attribute, as relates to payroll taxes, of a before taxable income deductibility? Why not eliminate taxes on all interest and dividends below say $3-$4 grand? Given the depreciation of the dollar and its possible quiet future downgrade by another 15%-20%, this might help keep down interest rates in the future.

Forget a national sales tax, for this places a heavier burden on those with lower incomes in relation to obligatory spending on such items as petrol, transportation, food, and clothing and could cut down on the purchase of more expensive durables such as autos. Instead, use a flat tax of 3-7% with absolutely no deductions allowed. Businesses should get the same simple treatment: lower tax rates with no deduction for expenses. Why should an individual who owns his own business be allowed to deduct the expense of his big SUV, its gas, and insurance while the same is denied to a person who merely works as an employee? Are not both vehicles used in the process of generating income?

What do you think?

JM