June 30, 2013

Tax Preferred Retirement Plan Possibly Being Eliminated


The leaders of the Senate tax-writing committee are trying to reform our current tax system by putting every tax break embedded in the tax code up for review – including retirement-savings incentives. Nothing wrong with this, I personally think that there are many tax breaks that are in fact a waste and should be eliminated to help in increasing revenues.
 
However, I question if putting tax preferred retirement plans in the chopping block is a smart idea from our beloved Senators. I am in favor of a fairer tax code that promotes economic growth. However, will eliminating the tax deferral status provided to retirement plan accounts address this goal? I am not convinced. 
We must be keep in mind that the tax breaks for retirement plans are in reality tax deferrals instead of permanent tax write offs. Therefore, workers who put money into retirement plans will have to pay taxes on the funds when they're withdrawn in retirement.Should they be lumped with all of the tax deductions and credits currently overloading our tax code?
I think that we must promote all forms of financial independence now more than ever, instead of creating more dependency in government subsidized programs. Americans should be encouraged to save, specially for the older years, and if there is a tax incentive that makes sense to me is this one. We provide tax breaks to move jobs out of United States, allow companies to defer U.S. tax on their foreign income, and allow companies to siphon profits they earn in the U.S. to overseas subsidiaries, all of these tax incentive are destroying our nation. We have bigger problems than the tax preferred treatment of retirement plans.
I believe that without the tax deferral incentive provided to retirement accounts Americans would not be encouraged to save for their older years and increasing the dependency on being supported by the government. Why penalize good behavior?



1 comment:

  1. It was very useful for me. Keep sharing such ideas in the future as well. This was actually what I was looking for, and I am glad to came here! Thanks for sharing such informative post.

    ReplyDelete