Your 401(k) Could Be Next
In an editorial yesterday in Investor’s Business Daily, the newspaper wrote:
“There are plenty of ways to play the redistribution game. One is to get rid of deductions for retirement savings, and Democrats are considering a plan to do just that.”
IBD begins the editorial saying:
“What the presidential candidates say now is important, but it's Congress that ultimately shapes tax law. Voters should be listening not just to Barack Obama and John McCain, but also to Democrats who hold key positions in Congress — particularly in the House, which has sole power under the Constitution to originate revenue bills.
“So what are powerful House Democrats thinking these days? For one thing, they're not happy with 401(k)s. Granted, no one who has 401(k) money in the stock market has much to be happy about. But it's not just the loss of investor wealth that has Democrats questioning these tax-advantaged retirement plans. They also dislike the plans' freedom of choice and the size of 401(k) tax deductions for higher-paid workers.
“The so-called "tax subsidy" of 401(k) plans comes to $80 billion a year, and its biggest beneficiaries are employees in higher tax brackets. A worker making $35,000 and paying income tax in the 15% bracket gets a $525 break by setting aside 10% of pay in a 401(k). A worker making $150,000 and paying in the 28% bracket gets $4,200 from the same 10% deferral.
“You can see why this irks the spread-the-wealth party . . . .”
Some voters in Arlington County and other parts of Virginia’s 8th Congressional district may appreciate the following explanation gleaned from a You Tube video of Rep. Jim Moran (D) explaining the principle of economics at an October 31 candidates’ debate:
“The last seven years has seen the highest corporate profit . . . but it hasn’t been shared and that’s the problem . . . Simplistic notion that people who have wealth are entitled to keep it and they have an antipathy towards the means of redistributing wealth . . . and (capitalism) doesn’t work in the long run.”
To further appreciate Rep. Moran’s understanding of the nation’s political economy, check the Weekly Standard blog that includes his famous quote regarding the use of taxpayers’ money, “When I become chairman [of a House appropriations subcommittee], I'm going to earmark the sh** out of it.” It.” There’s also a “bonus video” with “Moran freaking out on constituents who dare to ask Democrats to take at least a bit of responsibility for the housing crisis.”