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House DEMs to abolish 401K's?????

Discussion in 'Uncategorized Threads' started by tad houston, Oct 23, 2008.

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  1. tad houston

    tad houston TS Member

    Dec 21, 2006
    Ready for some CHANGE??????

    House Dems Want to Abolish 401(k) Tax Breaks
    House Democrats are apparently considering proposals to remake the country's $3 trillion 401(k) system, and this would include doing away with the annual tax breaks that 401(k) investors receive. Courtesy of Hot Air. The House Education and Labor Committee along with some members of the House Ways and Means Committee are looking at a plan by Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York. Ghilarducci testified before the Education and Labor Committee last week about this new proposal. “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.” See Workforce Week.

    The Democratic members called Ghilarducci's plan "intriguing" and said it was "part of the discussion." However, John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, New York, said "[f]rom where I sit that’s just crazy.” “A lot of people contribute to their 401(k)s because of the match of the employer,” he said. Further, higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined-contribution plans, he said. “If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets,” Belluardo said.

    Christopher Van Slyke, who is a partner in Trovena, a La Jolla, California advisory firm managing $400 million, put it another way. "This is a battle between liberalism and conservatism," said Van Slyke. "People are afraid because their accounts are seeing some volatility, so Democrats will seize on the opportunity to attack a program where investors control their own destiny,” he said.

    What does this really mean? Well, as Ed Morrisey puts it:

    That means your employer can no longer write off their contributions to your 401(k), and your capital gains would be taxable year-on-year. In other words, it becomes just another investment or savings account, with no tax benefit at all, and no employer contribution. Instead, Uncle Sam would give you your “matching” funds — up to a whopping $600 per year! Whoopee!

    The Democrats want to end the private retirement system that has allowed Americans to become a vast investor class and put them back in thrall of the federal government. This is nothing more than a second welfare system that would sit on top of the crumbling Social Security entitlement. It would leave the American working and middle classes with no retirement option other than a government handout.

    Could this really happen? Absolutely, because most members of the two committees I mentioned above are Democrats, and since Democrats could gain seats in the House and Senate in the upcoming election, this news item could soon be a reality for you and your employer. Enjoy those 401(k)s while they last
  2. Big Heap

    Big Heap TS Member

    Jan 29, 1998
    From today's WSJ:

    Argentine President Cristina Kirchner announced this week that her government intends to nationalize the country's private pension system. If Congress approves this property grab, $30 billion in individually held retirement accounts -- think 401(k)s -- managed by private pension funds will become government property.

    That the state could seize retirement savings no doubt seems outrageous to Americans. But it is a predictable development in a country where government intervention in the financial system is the norm. With Washington now expanding its role as guarantor in American banking, that's something to think about.

    Mrs. Kirchner won't have trouble making the case for expropriation to Congress, which is controlled by her fellow Peronists. When the Argentine government ran out of money in 2001, it blamed the market and increased its own role in the economy. Since then it has imposed price controls, defaulted on its debt, seized dollar bank accounts, devalued the currency, nationalized businesses and tried to set confiscatory tax rates with the aim of making society more "fair." Mrs. Kirchner and her predecessor (and husband) Nestór Kirchner have also preserved the Peronist tradition of big spending.

    All of this has been deemed acceptable because of the "crisis." But it has come at a cost: Among emerging market investors Argentina is now considered one of the worst places on the planet to put your money. Now that commodity prices are cooling and the global economy is slowing, Mrs. Kirchner is facing a $10 billion shortfall in what is due on government debt by the end of 2009. Where else to turn but to the resources of the private sector? Argentina, if little else, serves as a cautionary tale on how to ruin an economy.
  3. halfmile

    halfmile Well-Known Member

    Jan 29, 1998
    Green Bay Wisconsin
    One of the reasons the 401K was initiated was that too many people were not saving for retirement, and as a result many people had to fall back on public assistance of one sort or another.

    Private accounts would alleviate that problem, and seem to do so. If the Wall Street pirates could only stop raiding those funds we might get a fair shake.

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