Workforce.com: “House Democrats Contemplate Abolishing 401(k) Tax Breaks”
Whats yours is mine, even if you dont like it.
iding underneath the recent political radar is a proposal being looked at by House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington to remove tax breaks given to people who invest into their 401k.
The plan is based on ideas from Teresa Ghilarducci, professor and analyst for the New York School for Social Research.
The proposal centers around forcing people from from the market, where roughly two trillion was lost over the past few weeks in volatility, and into (surprise) government programs.
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.
Democrat leadership seems to be very interested in the proposal.
“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.
What does this mean to you? It means that if you want to continue investing in your 401k plan it will be taxed into nonexistance.
It also proves that more than ninety five percent of Americans will be paying additional taxes.
If Senator Obama wins the Presidency with a Democrat majority in Congress there will be no check, look for more programs like these which focus on taking more money out of the private sector and forced into the government.