The Jenkins-Keogh bill “our opportunity”

The Jenkins-Keogh bill “our opportunity”

Editorials The Jenkins-Keogh bill is so important to the l’nt~ure that the editor asked Dr. Charles II. Patton, an orthodontist and a trust,ee of the ...

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Editorials The Jenkins-Keogh bill is so important to the l’nt~ure that the editor asked Dr. Charles II. Patton, an orthodontist and a trust,ee of the American Dental Association, to write a guest editorial on this subject so that the readers of the American Journal of Orthodontics my be brought up to date on this very important bit of proposed legislatron. THE JENKINS-KEOGH ‘ ‘ OUR OPPORTUNITY’



HE Jenkins-Keogh bill (JJ. R. 9 and 10) would allow dentists and other selfemployed persons to make income tax deductions of limit,ed amounts paid into a retirement program. It is a tax savings plan as well as a method of erwouraging self-employed persons to put awa)- money for their later years. As prcsent,ly written, the bill would permit a dentist or other self-employed person to deduct from gross income each 10 per cent of net, earnings up to a maximum of $5,000.00. Over a person’s tifetinic as much as $lOO,OOO.OOcould be set aside and deducted. A special provision of t,he bill would allow persons over 50 years of age to set aside and dedurt additional amounts. L\ five-year carry-over provision is included to permit, increased tlcdwtions in years of high procluctivit\-. The retirement program could be set IIJ~ either through at1 insurance company or through a t,rust fnntl arrangwlttnt with a hank or trust company. Under the in surance m&hod, most vxist,inp policies conltl he cwnT-ertccl or adjusted to acrow modatc t,hr retirement program. SCil1'

The bit1 contains a spwial formula for IOTYCI’than otdinar~ tax rates on lumJ~ sum distributions from a retirement after age 65. There is a, concomitant provision for tax Jwnalt!~ on tlistrihittion prior to age 65. Those, in brict’ simirnary, the main points of t IIv cwrrcni I)iJl. Its aclof taxes f’ront ~antagcs arc quitcb ohvio~is. It Jwrrnits a person to rlrff>r ~qment periods of high income to a later time wh(w, in the normal (~oursc of flvcnts, hc will be in a lower tax bracket. To illustrate the immediate benefits to be derivctl, take the case of a J)racticinp dentist who has $l,OOO.OObefore taxes, for the purchase of a retirement annuity. Assuming that, he is in the 30 per cent bracket, he Could, under the Jenkins-Keogh bill, save $300.00 in taxes. Put another way, he COLA buy insurance worth a full $l,OOO.OOinstead of only $700.00. All members of the dental profession, as well as other self-employed persons, could enhance the bill’s chances by making their views known immediately to il





their Representatives and Senators. This united effort will create an awareness in Congress of the widespread support for this legislation which exists in all Congressional districts. In reading the June, 1958, issue of the Journal of the American Dental Association, I was interested in the first article, entitled “Dentistry in 1967-A Symposium. ’ ’ The combined papers provided a fascinating prognostication and an intelligent perspective of the nation’s dental needs, demands, and services in t hc years that lie ahead. A better understanding of what tomorrow’s public will expect of the dental profession will enable the profession and each of its rnembrrs to rneet those challenges more effectively. This survey of the future is essential and important, but there is another phase of our professional life that has been taken for granted, ignored, or simply met with indifference. I am referring to our own security and interest in protecting our future. It is very important t,o see that certain tax inequities are corrected. The American Dental Association is doing its utmost to promote favorable legislation in the correct ion of these faults. This is not enough ; every member of our profession should assume his share of this responsibility. Since its inception, the Tnternal Revenue Code has, in its original adoption, been unfair to self-employed individuals. This is fundamentally wrong, and it is high time that those of us who arc affected should take measures to correct this error. Employee retirement pension funds have had an astounding growth in the United States since 1942 when the government supplemented the Social Security A($ to encourage corporations and their employers to set up pension funds under preferential tax treatment. The Code was amended in 1954 but did not give any Our present tax law still discriminates consideration to the self-employed. against the self-employed taxpayer in favor of the employee who is given a taxfree retirement plan by his employer. As the result of this, 10,000,000 owners of small businesses, physicians, dentists, attorneys, account,ants, farmers, and others experience an economic injustice. Canada and Great Britain have passed favorable legislative measures that It seems to me that our profession, along with others equalize the tax burden. that are similarly affected, should endeavor at once to use proper measures to The American Dental Association is working strensecure a just tax settlement. uously on this problem. The A.D.A. is a member of t,he American Thrift Assembly, an organization composed of associations of t,he self-employed. This latter group is using every effort to induce Congress to consider favorably their proposals for a change in the present tas laws. Charles H. P&ton IiCE








ATTENTION, PLEASE! This alert is very import,ant to all selfernplopcd persons, such as dentists, physicians, lawyers, and farmers. Dentists, of course, for the most part, are self-employed. If you are a dentist,