Posted on 06/03/2011 9:32:45 PM PDT by rabscuttle385
Should Congress put limits or even completely do away with the tax incentives that make saving within a 401(k) or some other tax-advantaged retirement plan attractive in order to cut the deficit?
The Congressional Joint Committee on Taxation and the Treasury Department's Office of Tax Analysis conclude that these retirement planning programs will cost the federal government about $600 billion in lost revenue over the next five years.
Here's what they suggest instead:
Bipartisan Policy Center Debt Reduction Task Force -- Maintain existing accounts but cap tax-preferred contributions to the lower of $20,000 or 20 percent of income.
National Commission on Fiscal Responsibility and Reform -- Consolidate the various retirement accounts and cap tax-preferred contributions to the lower of $20,000 or 20 percent of income.
The American Society of Pension Professionals & Actuaries, or ASPPA, says the government's math is fuzzy because it doesn't accurately figure deferred revenue -- savers eventually take the money out and pay taxes on it. Based on its calculations, the government would only gain about 25 percent more in taxes and the price would be reduced income and security for people living in retirement.
A separate study by the Stanford University Graduate School of Business says that the introduction of 401(k)s has had an enormous impact on how people invest in stocks and bonds. At the end of World War II, individual citizens owned 90 percent of the stock market; by 2006, they owned only 30 percent. The other 70 percent was held by institutions, including mutual funds, insurance companies and pension funds.
Ilya Strebulaev, associate professor of finance and primary author of the study, recommends that tax reformers consider making the tax rate on capital gains equal to the tax rate on equities held in tax-advantaged accounts. Now, of course, the capital gains rate is 15 percent for most people -- less for low-income people, while the rate son equities in tax-advantaged accounts are the same as for ordinary income. This would level the playing field and potentially make it less attractive to hold stocks in a tax-advantaged accounts. He believes that among other things, holding stocks outside of institutional accounts would encourage individual investors to pay more attention to how their money is invested. "Institutional investors are very passive. They delegate their vote. It's not the best social outcome," Strebulaev says.
Strebulaev dismisses the idea of limiting the tax advantages of retirement accounts to increase revenue. "What I think what our research delivers is that all these small twists in taxation are very unlikely to work."
The Republicans in the House have to know it would be the end of most of their careers if they passed such a thing.
While Dems had both houses, yes it was very possible but I can’t imagine enough Republicans would think this was a good idea, not even the RINOs.
Note; As gas has risen to 4 dollars plus/gal. there has been NO mention of the petrolem reserve. Is the gov’t buying hundred dollar oil to put in it? With taxpayer money of course.
More plotting of desperate schemes to postpone doing the one and only thing that will solve the deficit crisis -
STOP UNNECESSARY, UNCONSTITUTIONAL SPENDING
You must switch to an alternative economy and get out from under the material system. Sell it all and move far away from the cities. It’s all coming down and your survival depends on your preparation to survive.
the RATS in Congress will probably EXCLUDE their generous retirement accounts
Another reason to scrap the present tax code and have a national sale tax.
for real class warfare to break out, they’ll just start taxing overall assets/net worth to “redistribute”.....Ever hear of imputed worth? It’s coming.
I take the deferred first to lower my tax bracket. If there is anything left over, it goes into the Roth. However, I am going to put more into deferred this year because Illinois raised the state income tax from 3% to 5%..
Somebody call Ric Edelman!
let ‘em try....funny things happen when people have nothing else to lose....and intelligence and talent.
“....forget your 401...use the money to pay off your mortgage or bills...”
I try not to have any bills except for monthly utilities. Paying off the mortgage used to be a goal until property values took a dive and I realized that other peoples irresponsibility had wiped out all the equity I should have built up.
After 20 percent down and making extra payments for five years, we can now probably sell the house and break even. I realize that will probably eventually recover, but the real problem is that we aren’t allowed to “own” property in the U.S. as long as we continue to allow the government to tax us on it.
We have become worse than slaves to an ever oppressive government that endlessly seeks ways to regulate, tax and control every aspect of our lives. I long for freedom.
That would be the "House of Representatives", not "the Congress". But with that change, you are correct.
Uh, it's called the "Strategic Petroleum Reserve" for a reason, and that reason is to allow us to fuel our ships, planes, and tanks in the event that things shut off oil flow from the Middle East......not so you can pay $0.20/gallon less for gas. The answer to the high gasoline (and diesel) prices is "drill here, drill now".
Interesting times we live in, as the old Chinese curse goes.
It really comes as no shock, and shouldn’t to anyone. It’s inevitable that sooner or later, as the FedGov really runs up against the wall vis-a-vis deficit spending, they’ll go for any source likely. That includes everyone’s 401k.
Like I’ve said, my gut tells me Obama is a two-termer. I know that may sound impossible, given the overall state of the economy, world affairs, etc., but I think he’s got a good chance at being re-elected. There’s really no-one on the GOP side I see (as of this writing) who can generate the enthusiasm needed to defeat him. Mind you, with Mrs. Palin’s bus trip, she could well be a potential candidate who I think may well be able to defeat Obama, though of course, nothing is guaranteed in politics. Only time will tell; if she officially tosses her hat into the ring, then there’s a good chance Obama will be out come 2013. If not, barring a dark horse candidate, (ie, Herman Cain, Rick Perry, etc.) the GOP will likely revert to their typical, “OK buddy......you’re up next!” routine, and I don’t see that firing up the base sufficiently. And of course, if the base isn’t fired up, Obama wins by default (to quote Homer Simpson, “DE-FAULT; the two sweetest words in the English language”).
It’s waaaayyyyy to early to try and call 2012. The GOP field isn’t even close to drawing into some kind of focus.
I confess to being extraordinarly cynical in regard to any politician, and that include Mrs. Palin, Mr. Cain, Mr. Perry, and whomever I may have forgotten to mention. I trust no politician. My attitude is best summed up by a great quote from the late Arthur C. Clarke (though I forgot which book); “ ‘Those who actively seek power are usually the most ill-suited to wield it’ “, or something to that effect. The current occupant of 1600 Pennsylvania Avenue is the living proof of that maxim. Oh well.........maybe I’ve just become jaded in grumpy in my older, more mature years.
I think I’ll go out and enjoy a nice cup of Turkish tea here in Berlin - maybe even a kebab. It’s a beautiful day here, about 75 degrees, clear skies.
One last thing; it pains me to say this, being a proud American, but I can honestly say there’s more freedom here in Europe, aside from the rather anal beauracracy, than what I’m reading about back home. No SWAT teams shooting innocent people that I’m aware of, no being molested at the airport, no hassels from power-drunk police (the polizei, at least in Berlin, are quite helpful, especially if you’re American; they like Americans generally), I can smoke in the cafe or bar, and it’s generally pretty relaxed. Of course, I’m only talking about Berlin; your mileage may vary.
“Look at what we have become in 28 months.”
And, this insanity never needed to happen. The human wreckage of millions of American citizens has been calculated and deliberate.
595 days is such a horribly long time, especially when considering that this guy is on the attack every single day. At 62, I am at a point in life where I would like time to slow down, but instead, I find myself essentially wishing my life away.
I wish you a good day.....
That was a nice post to read with my first cup of coffee. I also read your profile and I am envious.
I’m too old to pull out and move to some other place on the planet and if I did, it would have to be on a boat so that I could quickly leave when the neighborhood was no longer to my liking. ;>)
I truly believe that Palin can stop the wreckage and with our help, get this country back on track. If that doesn’t happen, I’ll envy you even more.
Firearms, are you allowed to have firearms over there?
I hope you enjoyed your cup of Turkish tea.
Cheers.....
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