I came across this article in today’s Tampa Bay Business Journal:
As part of his proposal, Gallagher, who is an announced candidate for governor of Florida, is asking the Legislature to earmark the increase in sales tax revenue collected during hurricane recovery to help offset assessments against homeowners.
Other solutions being advocated by Gallagher include:
- creation of a national Catastrophe Fund
- allowing tax-deferred catastrophe reserves for insurance companies
- standardizing Florida’s building codes statewide, and
- creating federal tax-free Catastrophic Savings Accounts
I like the idea of a catastrophe savings account. However, what I’d like more is just a simplification of the alphabet soup of tax-advantaged savings plans already available.
Rather than having a 401(k), a medical savings account, a dependent care savings plan, etc. what I’d really like to have is just one tax-advantaged account. Put money in pre-tax, and make penalty-free withdrawals for income replacement (due to retirement, disability, or unemployment), medical expenses, educational expenses, maybe as a partial contribution towards a downpayment on a first house, and to recover from natural disasters.
One problem with our current alphabet soup is that their usefulness is very limited for people of limited or modest means. Yes tools are available, but there’s always a question of how much to contribute to which account, because transfers from one type of account to another are difficult, if not impossible, requiring more guesswork about future circumstances than many or most people are comfortable undertaking.
However, with one multipurpose account, a saver just has to worry about putting in as much as they are able, without having to worry about what goes where.