Congress Considering Removing Tax Exemption From Retirement Savings
Our friends on the left give short shrift to the idea that tax increases will harm the economy, yet one of the controversial aspects of tax policy is the capital gains tax rates. We’re supposed to believe that big increases in taxes on capital gains won’t hurt the economy, even when targeted toward “the rich” who, frankly, do the most investing in our economy.
And apparently we’re also supposed to believe that removing the tax incentive for Americans saving for their own retirement won’t hurt either:
For many Americans, it’s the first order of business when they visit the HR department at a new job: enrolling in the 401(k) plan.
The tax-deferred savings plans have been promoted as one of the best ways to prepare for retirement, as traditional pensions become a thing of the past.
But the tax-free part is coming under greater scrutiny, as Congress looks under every couch cushion for the dollars needed to strike a deal on the looming fiscal cliff, and possibly re-write the tax code next year.
It’s been a frequent target of would-be budget reformers across the political spectrum, including the Simpson-Bowles Commission and the Center for American Progress. Even President Barack Obama has eyed changes to the rules governing 401(k)s. …
If the government forced workers to immediately pay tax on the earnings they put in these accounts, the government could put $162.7 billion back into its coffers, in 2014 alone, according to the Joint Committee on Taxation figures.
America already has a major problem with citizens spending far too much, and not saving nearly enough. And Social Security? Our national pension system that is supposed to act as our retirement safety net? It’s in deficit, obligated to pay out more in benefits every year than it collects in revenues, and already relying on a trust fund that is an accounting fiction. What’s worse, revenues for Social Security have been undermined by Obama’s “Making Work Pay” payroll tax cuts which came out of the programs revenues.
And now we’re going to start making Americans pay billions of new taxes, annually, on their retirement savings. Because why not? It’s not enough that the entitlement state has grown so burdensome that younger generations of Americans may never be able to accumulate adequate savings to provide for their own retirements, let’s punish them for putting away what savings they can afford.
Because what else are going to do? Downsize government to something we could, you know, actually afford?Tags: 401(k), deficits, national debt, piggy bank, Taxes