Let’s just get rid of ALL the Bush tax cuts and put this country back on a fiscally responsible path.
4:51 pm February 8, 2012
Mary wrote:
unfortunately walter, doing that will give no where near or even close to putting the country on a fiscally responsible path. It would not be that much money, maybe, maybe around 70 billion a year but that estimate was back when more people had jobs and there were more millionaires.
plus this administration would just spend even more of our tax money and get us deeper than debt.
the current administration has not even submitted a budget for the last 3 years, give me a break. I would rather the people kept their money and substantially reduce government spending.
you aren’t going to get a fiscally responsible government by taking away the people’s money and spending it on Obama’s buddies for payback in campaign contributions.
5:00 pm February 8, 2012
cdg wrote:
“Interestingly, many of the same people favor both tax preferences for 401(k) plans and favorable treatment for capital gains and dividends. The two goals are clearly inconsistent. The lower the tax rate on capital gains and dividends, the lower the tax preference for 401(k)s.”
What a ridiculous statement! In fact, “the two goals” are quite consistent: reduction of the onerous tax burden. The 401K provides tax deferment (not necessarily a reduction) for funds set aside for retirement, and thus provides an incentive to save for retirement as well as a tax savings. The reduced capital gains tax provides an incentive for job-creating, economy-building, revenue-generating investment as well as a current year tax savings.
@walter (above): The Bush Tax cuts resulted in dramatically INCREASED government revenues, despite (or rather because of) the lower tax rates. The problem was (and continues to be) that Congress has spent 140% of the revenues generated, most of it on “social programs” (and not military programs or foreign wars, contrary to popular misconception). If you want fiscal responsibility, vote for a conservative candidate for Congress and the White House, not the Marxists who have spent more in the past four years than all previous administrations combined.
8:55 pm February 8, 2012
asdf wrote:
walter if we are to get back to a sustainable path, we must cut spending. we can never raise enough taxes to cover our current deficit. over the last 98 years or income tax history, tax revenues have never been above 20% of GDP and has averaged only 18.5%, our current level of spending is way above 20%. thats actual history, not speculative debate about economic theory. being that actual history is indisputable, we could raise taxes back to 92% as they were in 1952, and still not be able to cover our current deficit
12:26 am February 9, 2012
Hugh Akston wrote:
Roth IRA withdrawals WILL be taxed. Congress will need the money and they will find a way to steal it, just like they tax SS benefits now (FDR swore these would NEVER be taxed). They will find a way to take your money, most likely by reducing SS benefits, raising medicare premiums, eliminating deductions or some such trick, triggered by the existence of a Roth IRA. Why do you think they are encouraging people to do Roth conversions? Certainly not for the benefit of the taxpayers.
6:59 am February 9, 2012
Spanish Bill wrote:
Please use the proper terms. As of December 17 2010 the cuts referenced became the Obama tax cuts. Words are important, getting it right matters.
8:44 am February 9, 2012
craig wrote:
tax preference has never been the primary reason to save & invest in a 401(k). the company matching contribution has always been the main driver. surprised that Ms. Munnell could write an analysis and not even mention the significant advantage of a potential company match.
8:48 am February 9, 2012
JF wrote:
What a bizarre post. Using Alicia’s logic let’s tax capital gains (and ordinary income) at 100% then 401Ks will be super attractive. I agree with cdg, the purpose of both tax schemes is to reduce the tax burden and (hopefully) increase growth and government revenues.
8:53 am February 9, 2012
JF wrote:
PS Alicia, the Bush tax cuts DO NOT reduce 401K advantages. The tax cuts have no impact on 401Ks. The cuts simply make an alternative investment approach more appealing and may be advantageous to many retirees.
9:42 am February 9, 2012
Brian wrote:
Bush has been out of office for quite awhile. I also think his tax cuts expired and were renewed by the current President.
9:47 am February 9, 2012
Rick wrote:
Another academic assessment of meaningless ilk. (Don’t we have enough of that with Bernanke.) I agree with all above comments except, of course, Walter. 401-Ks are certainly not as attractive to employees because more employees have also eliminated their accompanying employee pension plans. However, 401Ks still remain attractive saving mechanisms because of the match as well as the fact that most plans offer a wide range of investment options not normally available to small investors. Thus they can build a portfolio of mix-risks assets. Many smaller investors, especially those starting out, don’t have the asset base to invest heavily in tax-free or corporate bonds nor would it be good if we encouraged them to be 100% in the stock market, though stocks historically offer the best long-term return of all non-commodity asset classes.
10:11 am February 9, 2012
Kman wrote:
Why can’t we understand that to solve our federal deficit we need to work on resolving both sides: the spending and the revenue sides. Too many people only use half their brain: the Right side is the Republican side and the Left side is the Liberal side. Here is another spotlight: our lowest marginal tax rates and capital gains taxes were the years prior to 1929. Lets not be overly committed to thinking lower taxes are good for job growth. It takes a flexible, multi-dimensional and intellectual Washington to resolve the USA and the global economy. It can be done, but not when Washington is thinking out of one side of their brains.
10:31 am February 9, 2012
To Hugh Akston wrote:
You are right on!! Whenever the gov’t is the other side of the agreement, expect to have the rules changed unilaterally. This has been demonstrated time and time again (e.g. Limited partnerships, Socail Security Taxation).
The fact is we do not know what the tax regime will be in the future. The best we can do is diversify our methods of savings (taxable accts, IRA’s, 401Ks, physical assets) as well as the assets invested in.
12:26 pm February 9, 2012
JF wrote:
Kman–agree with your basic thesis: need to work on cost and revenues. Where we may have a disagreement is the impact of marginal tax rates on total tax revenues. In general, I think it very possible to increase marginal rates but decrease total revenues.
6:37 pm February 9, 2012
Brandon Pope wrote:
The Elliott Wave Principle is the analysis that “Professional Money” uses to make their long term buys and sells. Use this information to benefit from their market moving strength! I highly recommend viewing my blog @ http://www.AnotherMarketBlog.blogspot.com for FREE information regarding this life changing topic, and grab a FREE account through Elliott Wave International, the expert market forecasters. It is for sure worth the few moments to look at the information that could very well save YOU a lot of hard-earned money, Guaranteed! Brandon- AMB
Let’s just get rid of ALL the Bush tax cuts and put this country back on a fiscally responsible path.
unfortunately walter, doing that will give no where near or even close to putting the country on a fiscally responsible path. It would not be that much money, maybe, maybe around 70 billion a year but that estimate was back when more people had jobs and there were more millionaires.
plus this administration would just spend even more of our tax money and get us deeper than debt.
the current administration has not even submitted a budget for the last 3 years, give me a break. I would rather the people kept their money and substantially reduce government spending.
you aren’t going to get a fiscally responsible government by taking away the people’s money and spending it on Obama’s buddies for payback in campaign contributions.
“Interestingly, many of the same people favor both tax preferences for 401(k) plans and favorable treatment for capital gains and dividends. The two goals are clearly inconsistent. The lower the tax rate on capital gains and dividends, the lower the tax preference for 401(k)s.”
What a ridiculous statement! In fact, “the two goals” are quite consistent: reduction of the onerous tax burden. The 401K provides tax deferment (not necessarily a reduction) for funds set aside for retirement, and thus provides an incentive to save for retirement as well as a tax savings. The reduced capital gains tax provides an incentive for job-creating, economy-building, revenue-generating investment as well as a current year tax savings.
@walter (above): The Bush Tax cuts resulted in dramatically INCREASED government revenues, despite (or rather because of) the lower tax rates. The problem was (and continues to be) that Congress has spent 140% of the revenues generated, most of it on “social programs” (and not military programs or foreign wars, contrary to popular misconception). If you want fiscal responsibility, vote for a conservative candidate for Congress and the White House, not the Marxists who have spent more in the past four years than all previous administrations combined.
walter if we are to get back to a sustainable path, we must cut spending. we can never raise enough taxes to cover our current deficit. over the last 98 years or income tax history, tax revenues have never been above 20% of GDP and has averaged only 18.5%, our current level of spending is way above 20%. thats actual history, not speculative debate about economic theory. being that actual history is indisputable, we could raise taxes back to 92% as they were in 1952, and still not be able to cover our current deficit
Roth IRA withdrawals WILL be taxed. Congress will need the money and they will find a way to steal it, just like they tax SS benefits now (FDR swore these would NEVER be taxed). They will find a way to take your money, most likely by reducing SS benefits, raising medicare premiums, eliminating deductions or some such trick, triggered by the existence of a Roth IRA. Why do you think they are encouraging people to do Roth conversions? Certainly not for the benefit of the taxpayers.
Please use the proper terms. As of December 17 2010 the cuts referenced became the Obama tax cuts. Words are important, getting it right matters.
tax preference has never been the primary reason to save & invest in a 401(k). the company matching contribution has always been the main driver. surprised that Ms. Munnell could write an analysis and not even mention the significant advantage of a potential company match.
What a bizarre post. Using Alicia’s logic let’s tax capital gains (and ordinary income) at 100% then 401Ks will be super attractive. I agree with cdg, the purpose of both tax schemes is to reduce the tax burden and (hopefully) increase growth and government revenues.
PS Alicia, the Bush tax cuts DO NOT reduce 401K advantages. The tax cuts have no impact on 401Ks. The cuts simply make an alternative investment approach more appealing and may be advantageous to many retirees.
Bush has been out of office for quite awhile. I also think his tax cuts expired and were renewed by the current President.
Another academic assessment of meaningless ilk. (Don’t we have enough of that with Bernanke.) I agree with all above comments except, of course, Walter. 401-Ks are certainly not as attractive to employees because more employees have also eliminated their accompanying employee pension plans. However, 401Ks still remain attractive saving mechanisms because of the match as well as the fact that most plans offer a wide range of investment options not normally available to small investors. Thus they can build a portfolio of mix-risks assets. Many smaller investors, especially those starting out, don’t have the asset base to invest heavily in tax-free or corporate bonds nor would it be good if we encouraged them to be 100% in the stock market, though stocks historically offer the best long-term return of all non-commodity asset classes.
Why can’t we understand that to solve our federal deficit we need to work on resolving both sides: the spending and the revenue sides. Too many people only use half their brain: the Right side is the Republican side and the Left side is the Liberal side. Here is another spotlight: our lowest marginal tax rates and capital gains taxes were the years prior to 1929. Lets not be overly committed to thinking lower taxes are good for job growth. It takes a flexible, multi-dimensional and intellectual Washington to resolve the USA and the global economy. It can be done, but not when Washington is thinking out of one side of their brains.
You are right on!! Whenever the gov’t is the other side of the agreement, expect to have the rules changed unilaterally. This has been demonstrated time and time again (e.g. Limited partnerships, Socail Security Taxation).
The fact is we do not know what the tax regime will be in the future. The best we can do is diversify our methods of savings (taxable accts, IRA’s, 401Ks, physical assets) as well as the assets invested in.
Kman–agree with your basic thesis: need to work on cost and revenues. Where we may have a disagreement is the impact of marginal tax rates on total tax revenues. In general, I think it very possible to increase marginal rates but decrease total revenues.
The Elliott Wave Principle is the analysis that “Professional Money” uses to make their long term buys and sells. Use this information to benefit from their market moving strength! I highly recommend viewing my blog @ http://www.AnotherMarketBlog.blogspot.com for FREE information regarding this life changing topic, and grab a FREE account through Elliott Wave International, the expert market forecasters. It is for sure worth the few moments to look at the information that could very well save YOU a lot of hard-earned money, Guaranteed! Brandon- AMB