S.1940 - READY Accounts Act (119th Congress)
Summary
The READY Accounts Act (S.1940) proposes to amend the Internal Revenue Code of 1986 by introducing Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts. These accounts would allow individuals to save for qualified home disaster mitigation and recovery expenses, offering a tax deduction for contributions up to $4,500 annually, with potential inflation adjustments. The bill outlines specific measures that qualify for disaster mitigation and recovery, and establishes rules for contributions, distributions, and tax treatment of these accounts.
Expected Effects
The primary effect of this bill would be to incentivize individuals to save for potential home disaster-related expenses through tax-advantaged accounts. This could lead to increased preparedness for natural disasters and reduced financial strain on homeowners during recovery. The bill also introduces new regulations and reporting requirements for financial institutions administering these accounts.
Potential Benefits
- Encourages proactive disaster preparedness among homeowners.
- Provides tax benefits for saving towards home disaster mitigation and recovery.
- Could reduce the financial burden on individuals and families after a disaster.
- May stimulate the home improvement and construction industries by incentivizing mitigation measures.
- Offers a dedicated savings mechanism for a specific and potentially costly need.
Potential Disadvantages
- Creates additional complexity in the tax code.
- May disproportionately benefit higher-income individuals who can afford to contribute to these accounts.
- Potential for misuse or abuse of the accounts if regulations are not strictly enforced.
- Could lead to a decrease in government revenue due to tax deductions.
- The definition of 'qualified expenses' may be too narrow or difficult to interpret.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to promote the well-being of citizens by encouraging disaster preparedness. The power to tax and spend for the general welfare is implied in Article I, Section 8. However, the specific details of the tax deductions and regulations would need to be carefully scrutinized to ensure they do not violate any other constitutional principles, such as equal protection.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).