House Democrats Contemplate Abolishing 401(k) Tax Breaks

[Frankg]

House Democrats Contemplate Abolishing 401(k) Tax Breaks
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.
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October 16, 2008
House Democrats Contemplate Abolishing 401(k) Tax Breaks
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.

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.

At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.

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.

“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

Under the current 401(k) system, investors are charged relatively high retail fees, Ghilarducci said.

“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.

She has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said.

“This [plan] certainly is intriguing,” said Mike DeCesare, press secretary for McDermott.

“That is part of the discussion,” he said.

While Miller stopped short of calling for Ghilarducci’s plan at the hearing last week, he was clearly against continuing tax breaks as they currently exist.
http://www.workforce.com/section/00/...e/25/83/58.php (http://www.workforce.com/section/00/article/25/83/58.php)

[ROdger Right]

Dems and their welfare

[Mick063]

Corporate America negligence has finally killed pensions (http://www.nytimes.com/2005/10/30/magazine/30pensions.html?pagewanted=1&_r=1) once and for all.

This is not by accident. Under conservative political rule, corporations changed the standard format for Americans to build retirement income from pensions to 401k.

Why?

Because it is behooves them that your interest aligns with theirs. In other words, a record profit by Exxon is tolerable if your retirement is heavily vested in that corporation. Large tax breaks to Fortune 500 company's are tolerable if your retirement is invested in same. Utilizing cheap labor abroad is acceptable if a larger gain can be realized in your retirement portfolio. Using taxpayer money to bail out incompetent lenders is justifiable in the name of saving your 401k.

Eventually, your political interest completely aligns with corporate America. You encourage politicians to enact laws to promote profitability. Even laws that may adversely affect standard of living, the federal deficit, the environment, worker safety, or product safety. Profit is now the bottom line for any American with a 401k retirement. Large corporations love the fact that Americans have become so attuned to the stock market because of 401k.

And if you are not aware, then they will educate you. Have you seen the latest television advertisement for American oil and natural gas companys? You know the one where the attractive middle aged women asks "Ever wonder who owns American oil and natural gas companys? Well if you own a 401k, perhaps you do. Go to our website to learn more."

They've got you right where they want you. Pensions dead. Your live savings invested in their success. Your political views in line with theirs.

Want a better way? Make pensions viable again and remove the dependency on 401k as a retirement format. Remove the complete dependency on corporate America's success for your retirement.


By the way, they want to "privatize" Social Security for the very same reasons. Be very wary when Republicans use the term "privatize".

[SeedyROM]

Isn't it ironic that Dems still think higher taxes is Patriotic even after elections? Wreck the economy with risky plans, just discussing taxes on retirement accounts is a bad idea. Retiree's and soon to retire workers need assurances that thier retirement plans are secure.

The problems with Dems is they are selfish and narrow minded, they want to pay down the debt fast with our money, not the corporate money. For every Bill that raises corporate taxes, there will be offsets with tax breaks for the same companies. The game hasn't changed in DC, the people are held to a higher standard of accountability than the largest taxpayers.

[Mick063]

Isn't it ironic that Dems still think higher taxes is Patriotic even after elections? Wreck the economy with risky plans, just discussing taxes on retirement accounts is a bad idea. Retiree's and soon to retire workers need assurances that thier retirement plans are secure.

The problems with Dems is they are selfish and narrow minded, they want to pay down the debt fast with our money, not the corporate money. For every Bill that raises corporate taxes, there will be offsets with tax breaks for the same companies. The game hasn't changed in DC, the people are held to a higher standard of accountability than the largest taxpayers.

Why is the conservative voice falling on deaf ears?

Because you can't scare people with the phrase "Tax and spend liberal" when:

1) You spend more money than liberals do
2) You claim that Democrats will wreck the economy when the economy is already wrecked.

When the conservatives address kitchen table issues, they may eventually get an audience. The attack mode simply doesn't work anymore and changing demographics point to a dismal future. Republicans better get a plan together that is inclusive or they will be taken to the woodshed for decades.

[Moby]

Wreck the economy with risky plans
The economy is already wrecked. Haven't you been paying attention?

[kres24GT]

Republicans too. Our 401ks will be seized. All of our retirement accounts will be. We voted for big government, time to pay up. This is what all of you, frank included, wanted.

[Independent Harry]

Republicans too. Our 401ks will be seized. All of our retirement accounts will be. We voted for big government, time to pay up. This is what all of you, frank included, wanted.

kres man, can you figure out something else to say.. I mean, I believe the same thing you do, but christ...it's not the only words I write...lol

[kres24GT]

kres man, can you figure out something else to say.. I mean, I believe the same thing you do, but christ...it's not the only words I write...lol


Whaaaa......

The truth hurts. Everything here Harry is just the same stuff repeated over and over again. The difference is I am telling the truth and not just partisan rhetoric over and over again.


There is nothing else to post here. Frank is posting that Obama is going to seize our money as if it is a Dem plan. The Repubs would have done the same, there is no choice. We must pay up now. Frank, you, pretty much everyone here voted for a huge government that costs a fortune to run. Time to stop bitching about high taxes, shit economy, lack of freedom, etc. this is what the big government homers voted for.

[SeedyROM]

Why is the conservative voice falling on deaf ears?

Because you can't scare people with the phrase "Tax and spend liberal" when:

1) You spend more money than liberals do
2) You claim that Democrats will wreck the economy when the economy is already wrecked.

When the conservatives address kitchen table issues, they may eventually get an audience. The attack mode simply doesn't work anymore and changing demographics point to a dismal future. Republicans better get a plan together that is inclusive or they will be taken to the woodshed for decades.

Not a conservative. You people blindly stereotype without taking the time to learn whom you are talking too. What you and Sirmoby fail to recognize is that there is no rush to pay down the debt fast!!! Why should we be punished for the mistakes made by the 2 parties...........both parties failed in the last 8 years, that's why we call it Partisanship. The failure started with the 537 votes and a Supreme Court ruling and we went downhill from there.

You are the one in the attack and accuse mode of misjudgement, not me. I never used the phrase "tax and spend liberal" but that is what they do! I happen to care for the financial welfare of retirees and those who are soon to retire. Taxing retirement funds is being discussed, it is a bad idea. The economy will correct itself with no increases in taxes so long as energy and food prices continue to drop. We also need to cut government spending instead of more entitlement programs. Spending more will strain the system.
Taxing younger generations is a bad idea too!!:banghead:

The selfish and naive like you want to make excuses for higher taxes that will lead to paying down the debt faster and punish who, not the corporations, the people are the ones who will pay. Whatever tax hikes Obama passes or Pelosi pushes through before Jan 20th, we will see new hidden taxes that take back some of the tax cuts. This is how they game the system.

Spare me the disparaging rhetoric, I understand economics and I understand how unfair the tax system is. For decades it is the people who pay for government, corporations pay far less. Obama will never bleed them like he campaigned for. Why, because if he taxes corporations too much, they'll hike prices or lay off workers, we lose either way. Even worse, for every tax hike, the Fed will create new deductions to give corporations back some of the money. The system has been rigged this way for decades!!!!!

[Mick063]

The American people have spoken. Bring back the tax levels on corporations that existed when Bill Clinton was president. Better yet, soak the personal income of the wealthy like never before. That way we won't have to worry about the percieved " corporations passing their tax burden to the consumer" theory. The fluanting of excess by the wealthy in such difficult times are getting little symapthy from mainstreet America. I can link a few examples if need be.

I don't buy into the notion that President-elect Obama will be" gaming" the system. His tsunami of campaign contributions came from small donors. That is who "bought" him. A special interest called the American people. A political debt that is finally pointed in the correct direction. That is how I believe he is different.

His biggest fights will be within his own party. As long as he governs from the center (which he will), the Republicans are insignificant in that respect.

I don't agree with taxing retirement income. It is not (and has never been) part of Obama's platform. Then again, I disagree with the 401k format to be the standard bearer for pensions regardless if it is taxed or not anyway.

The previous post from Seedy was about as elitist as I have seen. One of the most cynical too. A man that has given up hope should not put so much effort into being influential. You will soon be left behind by a majority that have regained hope.

[SeedyROM]

The American people have spoken. Bring back the tax levels on corporations that existed when Bill Clinton was president. Better yet, soak the personal income of the wealthy like never before. That way we won't have to worry about the percieved " corporations passing their tax burden to the consumer" theory. The fluanting of excess by the wealthy in such difficult times are getting little symapthy from mainstreet America. I can link a few examples if need be.

I don't buy into the notion that President-elect Obama will be" gaming" the system. His tsunami of campaign contributions came from small donors. That is who "bought" him. A special interest called the American people. A political debt that is finally pointed in the correct direction. That is how I believe he is different.

His biggest fights will be within his own party. As long as he governs from the center (which he will), the Republicans are insignificant in that respect.

I don't agree with taxing retirement income. It is not (and has never been) part of Obama's platform. Then again, I disagree with the 401k format to be the standard bearer for pensions regardless if it is taxed or not anyway.

The previous post from Seedy was about as elitist as I have seen. One of the most cynical too. A man that has given up hope should not put so much effort into being influential. You will soon be left behind by a majority that have regained hope.

Check your facts, while Clinton may have raised corporate taxes, there were my expense deductions and loopholes that kept corporate taxes low. Amny companies paid less than 15% due to tax laws written in thier favor. I'm way ahead of the game of life because I see the big moves and the secretive ones that politicians give to corporations and the rich. Did Bill Clinton mail you a letter to advise you of the $24,000 SUV tax credit available to citizens and large companies? Nope, me neither! You had to justify the deduction with using the suv for business purposes. That's just one of many dozens of tax givebacks Clinton signed into law.

Corporate taxes will continue to be unfair until we get the right people in the legislature and we limit the lobbiest influence paid for by corporations. They game the system because they pay the most taxes and they create jobs and wealth for many. It is unfair, but thier argument is don't ask don't tell. All BS, they even flooded website with false information suggesting they paid 30% to 45%, after expenses and deductions those numbers dropped considerably.

fyi, I'm not elitist either, you live in the delusions of sterotypes, you were wrong once again!

[Cat slave]

Is this attack of the 401ks the same talk in which they are bouncing around
the idea of taking over everyones IRAs and 401ks and managing them at
3% gain...like SS.....and spreading the wealth that way? Taking over being
the important phrase here.

Thats when Ill have all mine in silver. Ill beat them to the punch. May
even do it before Uh-uhbama takes office.

[Cat slave]

Oops. Sorry, should have taken the time to read the original post.
Sorry. Yeah, same scheme. Like hell!