Skip to comments.Feds eye retirement-fund tax to cut $16 trillion-plus deficit
Posted on 04/22/2012 4:46:02 PM PDT by DeaconBenjamin
Uncle Sam, in a desperate attempt to fix its $16 trillion-plus deficit, is leering over Americans retirement nest egg as its new bailout fund.
Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.
A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankruptcy.
Besides 401(k)s, other possibilities include the mortgage-interest deduction on second homes, as well as benefits from employer-provided health insurance, which are untaxed now.
Under current 401(k) rules, total employee/employer contributions cant exceed $50,000. In the proposed rule change, employer/employee contributions would be limited to 20 percent of the employees compensation, with a maximum of $20,000, the so-called 20/20 proposal.
Another proposal being discussed in Congress says all tax deductions on 401(k)s and IRAs to be replaced with an 18 percent credit. The credit, according to a proposal that has been endorsed by economist William Gale, would be placed directly in a persons retirement account.
Unlike the current system, Gale told Congress, workers and firms contributions to employer-based 401(k) accounts would no longer be excluded from income and would be subject to taxation, contributions to IRAs would no longer be tax-deductible and any contributions to a 401(k) plan would be treated as taxable income.
In other words, the employee and employer would no longer get a deduction under the Gale plan, they would qualify for a credit. And the credit would increase [government] revenues by about $458 billion, Gale says.
(Excerpt) Read more at nypost.com ...
Tea Party, to the Bat Cave!
Freakin’ communists really piss me off. Their “government” scam cannot survive without stealing somebody else’s money.
They’ll probably confiscate funds from our retirement accounts but they’ll just spend it. They won’t cut anything. BTW, that 16 trillion is the debt. And you all know they aren’t going to cut that.
They did it in Argentina, and later in Ireland, too.
Oh, I’m SURE a guy who secretly exported machine-guns to DRUG DEALERS (and is probably bisexual, Muslim, and FOREIGN) would neeeeever do it, too, riiiiiight.....?
This was inevitable.
I had a nice 401(k), but I took it on a fishing trip and....
Of course, we know why. They have to pay for all of those entitlements they're buying votes with.
“I see you have some money there. Give it to me.” —Federal Government
I’m reminded of the British Tory Party MP that asked the question in the 80’s - “So no taxation without representation, that was the problem, right? So, how do you like it WITH representation?”
“as one way to prevent government bankruptcy. “
Stop spending would be another way.
If you look at where 98% of the votes from the people that receive welfare go.....
you'll know why they talk about taxing savings, home deductions, etc........but never cutting money to the cancer that is ACTUALLY destroying the country!
Thats a nice 401K plan you got there.
Speaking as a tax preparer, I’m getting to the point where when my clients ask what about next year, I just say - “That depends upon elections and outcomes and I cannot plan for either!”
More tax money = more money for government bailouts (aka, payoffs to friends and benefactors).
Then, they could tax baby piggy banks. After all, those kids don’t really need all those coins and cash.
Ah, yes; in the midst of the Obama recession, let us intensify the war on savings and investment. These people are hopeless.
That said, this would essentially turn everything into a Roth. (I'm assuming the tax deferral on earnings remains as is, and that this proposal applies only to the initial contribution.) That's not the end of the world. But the objectionable thing here is the mindless nickel and diming of useful and constructive things in order to kick the can down the road another year or two on the deficit.
NOTHING that is done on the tax side makes any difference unless we cut spending and reform entitlements.
How's about we let the Republicans know that anyone who supports this Big Gubmint Grab can expect NOT to receive any support (and in fact be opposed) next election?
MEANWHILE, the House Republicans need to be sent the same message (like NOW) that the same applies for anyone who supports the Big Brother Snoop on us Black Boxes for new vehicles Bill which will be winding its way there in the near future.
Cut deficit - stop spending.
There is no way whatsoever that we shall assess enough taxes in any way, shape or manner, that will simultaneously lower the deficit, and continue the same or perhaps even higher level of spending.
Of course, there is the cruelest and most regressive tax of all - to inflate the amount of currency in circulation to such levels that each individual unit of currency will be almost totally worthless. Then, old debts will not be at all onerous.
I will gladly pay you next Tuesday for a hamburger you sell me today.
And both sides of the aisle are using it to buy votes not just the usual suspects.
REPEAL THE SIXTEENTH AMENDMENT
ABOLISH THE IRS
IMPRISON THE CULPRITS
Some Dem congresscritter from CA. I wish I paid more attention at the time.