Anything that alters behavior will bear unintended consequences. They can only guess at the end result. Some things are obvious and perhaps are what they’re looking for.
You don’t get a tax break so you don’t put the money into a retirement plan the money will go into a bank and boost tier 1 capital. You spend it so velocity picks up. Those are two obvious beneficial results. Less money into money managers hands means less growth overall in equities and less capital available to buy debt. Of course the banks will likely be sitting on more cash so they will be the big beneficiaries.
Very interesting. If i sat and thought about this longer i bet i come up with at least 50 more results.
One of the things that happened when they lowered the retirement plan limits is that they made these plans less important to executives. Not surprisingly, executives decided it wasn’t important to fund these plans well. Lower funded plans = employees get less benefits, taxpayer picks up tab, balance sheets get more volatile.