Capitol Monitor ....
Congressman J. Randy Forbes, Fourth District of Virginia 

February 20, 2004

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In this Issue

1. Point of View: The Best Investment in America's Economy

2.  5 Reasons to Consider Opening a Health Savings Account 

 

 

::  Point of View  ::

In the last four years the American economy has weathered some pretty strong storms. In early 2000 as the stock market began to decline, Americans watched as our economy began to slip into recession. Shortly after, on September 11, we witnessed one of the most horrendous attacks on American soil, an attack that brought increased instability and uncertainty in the U.S. economy. Pro-growth tax policies of the last several years, however, have been breathing life into all sectors of the American economy. Jobs, home sales, productivity, and consumer spending are all on the rise and the economy is growing strong.

Tax relief has returned to workers their own hard-earned money and the impact has been dramatic. Increased consumer spending means increased demand for products, which means American businesses and merchants are increasing their operations and creating more jobs. 

The progress we have made, however, is in jeopardy. Many of the tax cuts that Congress has passed in the last several years are set to expire, some as soon as the end of this year. If we fail to make these provisions permanent, American families will see significant increases in their taxes. Additionally, small businesses, many of which are taxed at individual rates, will also be burdened with higher taxes.

Twenty-five million small business owners that are taxed at individual income levels are at risk of losing an average cut of $3000. For small business owners in Virginia’s Fourth District this $3000 means a wealth of new business opportunities. These companies can buy new computers and new software, they can invest in new capacity, build additions, and most importantly, they can hire more employees.

Virginia’s families are also at risk of seeing much higher taxes. If you are a family of four, earning $40,000 when these provisions expire in 2005, your family will pay a $915 tax increase that year. That is money that could be used for college or other educational expenses, investment in a retirement account, to pay off debt, help meet medical and dental bills, or to put towards a home.

Without the tax cuts of 2001 and 2003, the recession following the hi-tech crash of the 1990s would have been deeper, the unemployment rate higher, and the job losses greater. The Treasury Department estimates that without the tax relief as many as 1.5 million more Americans would be out of work right now. Responsible tax relief gave millions of American families and businesses the financial break they needed to get back on their feet. Because we’ve put money in the hands of the people who earned it, economists have seen continued economic growth and increased jobs beyond their predictions. Raising taxes will jeopardize this very important economic progress. 

The collective decision-making of American families with their own money, and small businesses with their investments, is wiser than the decision-making of a few policymakers in Washington. By returning the money to those who rightfully earned it, Washington lawmakers are making the best investment in the American economy and the American people.

::  5 Reasons to Consider Opening a Health Savings Account  ::

With the rapidly rising cost of health care millions of Americans are finding it increasingly more difficult to afford health insurance today. To help combat this problem, Congress created Health Savings Accounts as a part of the new Medicare bill.  HSAs allow individuals to place money into a savings account tax-free for future medical expenses. HSAs are open to everyone with a high deductible health insurance plan. The only limitation on the health plan is that the annual deductible must be at least $1,000 for individual coverage and at least $2,000 for family coverage.

Health Savings Account funds can be used to cover the health insurance deductible and any co-payments for medical services, prescriptions, or products. In addition, HSA funds can be used to purchase over-the-counter drugs and long-term care insurance, and to pay health insurance premiums during any period of unemployment. Here are five great reasons to consider opening a Health Savings Account:

1. Tax Savings

Contributions to the HSA by an employer are not included in the individual's taxable income. Contributions by an individual are tax deductible. Individuals, their employers, or both can contribute tax-deductible funds each year up to the amount of the policy's annual deductible, subject to a cap of $2,600 for individuals and $5,150 for families. Individuals aged 55-64 can make additional contributions.

2. Earned Interest

The interest and investment earnings generated by the account are also not taxable while in the HSA. Amounts distributed are not taxable as long as they are used to pay for qualified medical expenses, such as prescription and over-the-counter drugs and long-term care services as well as the purchase of continued health care coverage for the unemployed individual (via COBRA). 

3. Reduced Insurance Premiums

Your insurance premiums may be lowered by 20%-40% when you change from a low deductible to a high-deductible plan. You can use these savings to fund your HSA. 

4. Portability 

HSAs are portable, so an individual is not dependent on a particular employer to enjoy the advantages of having an HSA. Like an individual retirement account (IRA), the HSA is owned by the individual, not the employer. If the individual changes jobs, the HSA goes with the individual.

5. Long-Term Savings

You can choose to let the funds in your account grow tax-deferred. After age 65, you may make withdrawals from your HSA for any reason without a penalty. 

To learn more, please visit the "Spotlight On" section of my website.

IN BRIEF ....

What Happened to the Surplus?
Click for more information from the Joint Economic Committee

Surplus

IN QUOTES ....

“For every $12 federal and state governments spend teaching teenagers about safe sex and contraceptives, only $1 is spent to encourage abstinence and fidelity. Doubling the federal investment in abstinence-until-marriage education will help teenagers make the most responsible life choices for health and happiness.”

- Congressman Forbes and 29 other Members of Congress in a letter to President Bush on funding for abstinence-until-marriage education, 1/30/2004

Click here to read this letter

ON THE HILL ....

Current Floor Proceedings

Bills Coming Up This Week

Monthly Whip Calendar

IN YOUR TOWN ....

February 26:
 Amelia Office Hours

March 5: 
Suffolk Office Hours

March 5:
Isle of Wight Office Hours

March 5:
Sussex Office Hours

OFFICE LOCATIONS ....

307 Cannon House Office Building
Washington, DC 20515
202.225.6365

505 INDEPENDENCE PKWY, SUITE 104
Chesapeake, VA 23322
757.382.0080

2903 Boulevard, Suite B
Colonial Heights, VA 23834
804.526.4969

425 H. South Main Street
Emporia, VA 23847
434.634.5575

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