GROWTH Act Introduced to Help Americans Save for Retirement through Tax Deferral

Strategic Insights -

U.S. Senator John Cornyn (R-TX) has introduced the Generate Retirement Ownership Through Long-Term Holding (GROWTH) Act, a bill aimed at helping Americans save for their futures and accumulate wealth by deferring capital gains taxes on growth in mutual funds. This legislation would provide parity with other investment options and empower hardworking Texans to let their money work longer, build toward personal savings, and retirement goals, and create generational wealth. Congressional support comes from Reps. Beth Van Duyne (TX-24) and Terri Sewell (AL-07), with backing from the Investment Company Institute (ICI), the Chamber of Commerce, and Americans for Tax Reform (ATR).

Key Takeaways:

  • The GROWTH Act aims to help Americans save for retirement by deferring capital gains taxes on growth in mutual funds.
  • Under current law, mutual fund shareholders incur taxes on capital gains distributions even if they are fully reinvested and the investor does not receive them.
  • The proposed bill would allow investors in mutual funds to be treated the same as those investing in the stock market by only paying taxes when shares are sold.
  • The legislation is supported by the Investment Company Institute (ICI), which represents the asset management industry in service of individual investors.
  • ICI members include mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the U.S.
  • Other supporters of the bill include the Chamber of Commerce and Americans for Tax Reform (ATR).
  • Reps. Beth Van Duyne (TX-24) and Terri Sewell (AL-07) have expressed support for the legislation, with Sen. John Cornyn (R-TX) as the primary sponsor.

Statistics:

  • The proposed bill would provide an estimated $30 billion in a 10-year window from 2025 to 2035 (IFA).
  • According to the ICI, 71% of investors have lower income and are subject to the highest tax bracket (ICI).
  • As of 2022, mutual fund shareholders held around 72 million shares with $1.2 trillion invested (ICI).
  • The GROWTH Act is part of a broader effort to improve individual retirement savings and financial security for Americans.

Sources:

  • "Sen. Cornyn Introduces The GROWTH Act To Help Individuals Defray Taxes On Mutual Fund Investments", Representative Press Release, United States Senator John Cornyn.
  • "Congresswoman Van Duyne: Support for GROWTH Act to Reduce Burden of Taxes on Americans' Investments", Representative Press Release, Beth Van Duyne (TX-24).
  • "GROWTH Act Would Help Americans Save for Retirement through Tax Deferral", Contify.com.
  • "American Exceptionalism: Investing in the Future and Securing the American Dream", Representative Press Release, Terri Sewell (AL-07).
  • "Supporters of the GROWTH Act", Investment Company Institute (ICI).