McCain suggests Democrats will tax 401(k) contributions, Dems say that's 'ridiculous'

Cleveland.com ^ | 10/30/08 | Stephen Koff

[Libloather]

"We're looking to protect 401(k)s, not tax them."

Confiscate the wealth and put it in a lock-box. Some protection.

[jwalsh07]

Go John!

[rightwingcrazy]

“ridiculous” = “not for another 2 years”.

[muawiyah]

The Democrats are telling lies. The fact they let these people come before an official subcommittee and propose such nonsense proves they intend to do it.

Those witnesses were certainly not there at the invitation of the Republicans!

I'm prepared to move everything I've got "off shore" if these pukes win.

[CottonBall]

They don’t want to tax them - they want to eliminate them altogether!

[cherry]

tax them?...they've been hinting at it for years....

what they'll do first is make it less attractive to have a 401k...they'll call it anything they want but it means a tax increase for most US workers, and it hits most US workers who are not getting the govt pensions.....

I won't contribute....I'll cash my check, pay my bills, maybe not work as much so the tax burden is less...why contribute if you're just going to get slammed for it..

[TribalPrincess2U]

Riiiiight. And dems never lie.

Dems want tax on everything.

[frogjerk]

DIM’s need your 401k money to subsidize their slush fund known as Social Security.

[sybilll]

I heard it myself on C-Span, then Rush picked up on it the next day. There are committee hearings on this, twice that I know of.

[Tench_Coxe]

Here’s the real kicker: Too much talk about taxing or rolling 401Ks into a government run system, and we’ll see a run not seen since the late 1920s-early 1930s.

[xcamel]

This has been in the news for 10 days now - plenty of proof that it’s exactly what they’re up to.

http://www.freerepublic.com/focus/search?m=all;o=time;q=quick;s=401%28k%29

Why are they so far behind the curve?

[John Jorsett]

"You know, I'll eat my hat if this thing turns out into quotas."

- Hubert Humphrey on the Civil Rights Act

[Outland]

Lies, more lies and back-peddling.

[yldstrk]

Tax them? No just confiscate them outright.

[FreedomProtector]

For all the baby boomers looking to retire....the ‘rats want to means test 401k contributions....if u saved a lot and/or earned a lot they want to steal your $$ and/or your social security scam you have paid into forever.

[not2worry]

My bet is that they won't eliminate them, but they will have a graduated tax schedule on the 401K’s. The more you and your employer contribute the higher the tax rate will be on them when you withdraw. No sunset on these babies.

It will probably be mandatory to have a 401K tax plan based on the number of employees you have and/or the amount of any company's gross income. If you are unionized, not2worry, the unions will do all this for you, regardless of what your personal desires may be.

If you don't work and collect all the benefits from Obama’s share the wealth plan then you got it made!

There will be more unemployment simply because hard-working conservatives will revolt against Obama’s plan, ergo, unemployment will increase and the prophesy of Obama will come to pass.

God help America on November 4th! Troubling times are here filling our hearts with fear. Stand strong and vote November 4th for McCain/Palin. It may not be the best choice but it's a choice that will save our Country from becoming a Communist Regime in 4 years.

BTW, those voting for Barr, I beg you not to waste your vote. Remember Perot and who we got as President in the form of William Jefferson Clinton.

end of rant/

[JavaJumpy]

John McCain is correct:

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971

[Numbers Guy]

Their proposal would end my ability to put up to 20% of my pay into a 401-k without any of it being taxed. They would instead limit my contribution to 5% of my pay, which presumably would not be taxed.

If I had been making a full 20% contribution, that would increase my taxable income from 80% of my take-home pay to 95% of my take-home pay. That is a tax increase.

If I want to save more money for retirement I’ll have to use after-tax dollars — but I’ll also pay taxes on the money when I withdraw it, so it will be taxed twice.

Furthermore, they would force me to put the 5% into an account with a guaranteed return of a whopping 3%. 3 freakin’ percent. Over the long haul you can average 8% a year in any decent index fund, but they’ll instead limit me to a 3% return. Over 30 years you’ll end up with a nest egg that’s about 2.4 times as large with an 8% rate of return.

Your 401-k will be worth 42% as much under the Dem proposal as it would be with more normal investments. Oh, but let’s not forget that if you invest the other 15% of your income you’ll lose roughly 40% of it to taxes, so the now after tax money you invest on the side will be worth 60% as much.

In other words, suppose you make $60,000 in 2008 dollars (constant dollars to simplify). Under current law you could put $12,000 a year into an 8% return on investment index fund 401-k and you’d have $1.36 million after 30 years.

Under this proposal, you’d be allowed to put $3,000 a year in tax-free, returning 3%, for a total of $140,000. If you put the other $9,000, after taxes, into an index fund, you’d have to discount that by a roughly 40% marginal tax rate. So that $9,000 would turn into about $610,000.

So the Democrats’ proposal would turn your $1.36 million retirement nest egg into $750,000. And all that in the name of “protecting you” from risk. Some proposal. And it’s an absolute lie to say it would not be a tax increase.

[scooby321]

If and I mean a big if <P. There will be an underground economy.

[darkwing104]

I have a feeling that the stolen 401K payments would be deducted from your regular Social Security payments after you retire...