As if you needed another fiscal reason to kick your fiscally liberal representative to the curb…
Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
What?! We already do that with Social Security! It gets worse…
A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. She testified last week before Miller’s Education and Labor Committee on her proposal. …
Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
Allow me describe ECONOMIC DISINCENTIVE 101 in this context:
- Employers would no longer have a tax write-off of contributions to employee 401(k)s
- Your capital gains would be taxable year-on-year
- Becomes NO DIFFERENT than existing savings or investment account
- Government matches funds – up to a killer $600/year
- Investment limited to government bonds
Get educated, dear reader. KNOW what kind of “CHANGE” you’re asking for this election.