The War On 401(k)s

IBD Editorials ^ | November 3, 2008

[Kaslin]

Taxes: 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.

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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. So it's no surprise that Democrats are intrigued by an alternative plan that would replace 401(k)s with a flat tax credit at all income levels.

[elkfersupper]

My advice to the Democrats in the House of Representatives........go ahead and start that.

You can't lock yourself up tight enough or buy enough security.

I and several million of my fellow citizens will be paying you a visit.

[College Repub]

Let’s deal. Enact the flat tax, and I’ll take a flat tax credit peacefully.

[A_perfect_lady]

I have two friends who are... well, one’s a hard core leftie and one is moving further left all the time. Both earn more money than I do, and both watch their 401ks religiously. I have tried and tried to tell them what Obama + Dem Congress will mean, but they shake their heads and smirk at me like I’m an idiot.

[A_Former_Democrat]

Or call you a racist while calculating capital gains taxes on their 1040s.

[AnotherUnixGeek]

My advice to the Democrats in the House of Representatives........go ahead and start that.

I agree. I can't think of a faster way of returning both houses of Congress to Republican control. The Democrats would need a severe death wish to try messing with 401ks.

[RushingWater]

I don’t understand how any of this could ever be passed. It would be detrimental to the stock market - without the weekly paycheck inflows where would stocks be at????

[MrChips]

This is a nightmare in the making.

[reaganaut1]

“My advice to the Democrats in the House of Representatives........go ahead and start that.

You can’t lock yourself up tight enough or buy enough security.

I and several million of my fellow citizens will be paying you a visit.”

The Democrats are shrewd class warriors. Maybe they would phase out the 401(k) deduction for upper income people (say above $250K) and then talk about what a small fraction of people would be affected. It seems to have worked for Obama.

[Myrddin]

The Armenians got fed up with their tyrannical legislature too.

[darkwing104]

They want it all and now....

[BuffaloJack]

This is ridiculous.
O’Bastard now wants to extend his class warfare to sieze the live savings of middle America and give it away to support those who saved nothing. Anyone trys to take my 401K will be met by my second amendment rights.

[taildragger]

There has been numerous links to "Investment News" on this subject here on FR and the one big article they ran on it.

Who is Investment News?P>The Inside the beltway weekly newspaper for brokers, financial advisers and various reps and maybe some CPA's they do touch on taxes a great deal.

Print out the article tomorrow and bring it to your lib friends at work, 10 to 1 they $&!+ their pants...

[Salgak]

Not to mention, it would have an effective date.

Imagine the TRILLIONS of dollars that will be withdrawn and the effect that massive cash vacuum will have on the stock market. . . .

[magooey]

What did the Armenians do? And can we peacefully recall all of our Congressmen?

[redgolum]

They rose up against the Turks, and died by the thousands if not millions.

The Turks gave Hitler and his pals an idea for getting rid of troublemakers

[theymakemesick]

...what you said...

[an amused spectator]

The Democrats would need a severe death wish to try messing with 401ks.

You forget that The Main Stream Obama's New Government media would be lying about this 24/7 for the new Obama administration...

[Myrddin]

On 27 October 1999, gunmen entered the legislature and opened fire on deputies and officials, killing Prime Minister Vazgen Sarkisyan and Speaker Karen Demirchyan, two deputy speakers, and four others. The purported leader of the gunmen claimed they were targeting the prime minister and were launching a coup to "restore democracy" and end poverty, and took dozens hostage. President Robert Kocharian rushed to the legislature and helped negotiate the release of the hostages, promising the gunmen a fair trial. The killings appeared the product of personal and clan grievances. Abiding by the constitution, the legislature met on 2 November and appointed Armen Khachatryan (a member of the majority Unity bloc) as speaker, and Kocharian named Sarkisyan's brother Aram the new prime minister the next day, seeking to preserve political balances. Political infighting intensified. The military prosecutor investigating the assassinations detained a presidential aide, appearing to implicate Kocharian in the assassinations. The Unity and Stability factions in the legislature also threatened to impeach Kocharian in April 2000. Seeking to counter challenges to his power, Kocharian in May 2000 fired his prime minister and defense minister. In October 2001, on the second anniversary of the shootings in parliament, thousands of protesters staged demonstrations in Yerevan to demand Kocharian's resignation. As of February 2003, the assassination trial continued.

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