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Without Inflation Indexing, Saver’s Credit’s Value Falls Sharply over Time The lack of inflation indexing would cause significant erosion in the value of the saver’s credit over time. As noted above, a married couple with no children that earned $30,000 a house divided in 2005 and contributed $2,000 to a retirement account will receive a tax credit of $1,000 when it files its 2005 a house divided tax return. This essentially lowers the cost to the couple of making a $2,000 a house divided retirement contribution to $1,000, providing a powerful incentive for the couple to undertake retirement saving. But under the House bill, if this couple’s income merely keeps pace with inflation, the tax credit the couple receives for making a $2,000 contribution would plunge to $200 in 2009 and remain at that level through 2015.
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