GOP Considering Taxing 401k Plans Upfront

[InTheLight]

Lost amid all the talk about tax reform is this bombshell--Republicans are thinking of taxing your 401k contribution upfront.

Under current law any contributions to your 401k is made from pre-tax dollars, meaning the money is deducted from your paycheck before taxes are taken out of your check. Your 401k contributions have the effect of lowering your income subject to taxation. Only when you withdraw money from your 401k is it considered income and thus taxable.

But:

One idea quietly being discussed would be taxing the money that workers place into their 401(k) savings plans up front: an idea that would raise billions of dollars in the short-term and is pulled from the Camp plan. This policy idea is widely disliked by budget hawks, who consider it a gimmick; the financial services industry that handles retirement savings; and nonprofits that try to encourage Americans to save.
Trump’s team and lawmakers making strides on tax reform plan

Sent from my Motorola Droid Turbo.

 

[Adonia]

Sure, why not! The establishment Republicans like their blood brothers the Democrats refuse to stop deficit spending so they need ever more money to feed the government monster. At some point the whole kit and kaboodle will come crashing down.

 

[InTheLight]

Sure, why not! The establishment Republicans like their blood brothers the Democrats, refuse to stop deficit spending so they need ever more money to feed the government monster. At some point the whole kit and kaboodle will come crashing down.

Establishment Republicans? Democrats?

From the article:

The tax reform process has been led by National Economic Council Director Gary Cohn, Treasury Secretary Steven Mnuchin and a handful of top GOP leaders on Capitol Hill.


Sent from my Motorola Droid Turbo.

 

[Adonia]

[QUOTE="InTheLight, ]Establishment Republicans? Democrats?

From the article:

The tax reform process has been led by National Economic Council Director Gary Cohn, Treasury Secretary Steven Mnuchin and a handful of top GOP leaders on Capitol Hill.


Sent from my Motorola Droid Turbo.[/QUOTE]

Oh that's right, Gary Cohn, the registered Democrat and most liberal member of the Trump administration. Republicrat or Demican, they are all establishment types and cut from the same cloth. Trump is good on some things but he is muddling in the swamp just like the rest of them.

 

[InTheLight]

[QUOTE="InTheLight, ]Establishment Republicans? Democrats?

From the article:

The tax reform process has been led by National Economic Council Director Gary Cohn, Treasury Secretary Steven Mnuchin and a handful of top GOP leaders on Capitol Hill.


Sent from my Motorola Droid Turbo.

Oh that's right, Gary Cohn, the registered Democrat and most liberal member of the Trump administration. Republicrat or Demican, they are all establishment types and cut from the same cloth. Trump is good on some things but he is muddling in the swamp just like the rest of them.[/QUOTE]I wonder who hired Cohn and Mnuchin?

Oh, that would be Trump.

Sent from my Motorola Droid Turbo.

 

[Reynolds]

Lost amid all the talk about tax reform is this bombshell--Republicans are thinking of taxing your 401k contribution upfront.

Under current law any contributions to your 401k is made from pre-tax dollars, meaning the money is deducted from your paycheck before taxes are taken out of your check. Your 401k contributions have the effect of lowering your income subject to taxation. Only when you withdraw money from your 401k is it considered income and thus taxable.

But:

One idea quietly being discussed would be taxing the money that workers place into their 401(k) savings plans up front: an idea that would raise billions of dollars in the short-term and is pulled from the Camp plan. This policy idea is widely disliked by budget hawks, who consider it a gimmick; the financial services industry that handles retirement savings; and nonprofits that try to encourage Americans to save.
Trump’s team and lawmakers making strides on tax reform plan

Sent from my Motorola Droid Turbo.

Probably be best. The rate our govt is going, the tax rate may be 70 % when I fully retire.

 

[carpro]

Lost amid all the talk about tax reform is this bombshell--Republicans are thinking of taxing your 401k contribution upfront.

Won't happen.

 

[InTheLight]

Probably won't happen but it shows the lengths they will go to get a 15% corporate tax rate. If they do a 15% corporate tax rate they have to find offsetting tax revenues for the cut. That's why they are looking at taxing 401k's upfront, eliminating the mortgage interest rate deduction, ending the deductibility of local and state taxes, among other schemes.

I remember when Democrats held a Senate sub-committee hearing in 2009(?) concerning limiting the tax deductibility of 401k plans. There was a handful of witnesses and one of them proposed a plan to convert 401k plans into a guaranteed government retirement plan. This plan coming in the wake of people losing 30% to 50% of their retirement savings in the market crash. There was a outrage among conservatives decrying this government confiscation of private wealth. Cooler heads said that it would never happen but that didn't stop the hysteria on the right.

Now here the GOP is proposing taxing 401k plans and the idea is shrugged off as "it will never happen." Irony.

 

[Salty]

...refuse to stop deficit spending ... .

and that there lies the major challenge to over come.

Every politician wants to cut the budget - except those items that help his district.

 

[Reynolds]

and that there lies the major challenge to over come.

Every politician wants to cut the budget - except those items that help his district.

Just think, Newt and Slick Willie had the budget balanced.

 

[InTheLight]

Just think, Newt and Slick Willie had the budget balanced.

A combination of government policies, including tax policies, welfare reform, and others, and good old fashioned luck of being in office during the dot.com boom. Still, it happened on their watch and I give them credit where credit is due.

 

[Salty]

Balancing the budget is NOT sufficient - we need to start reducing the National Debt

as of today - 5 Sep 17 the debt :
Total--------is about 20 billion
per citizen is about $ 60,000
per taxpayer about $165,000!!!

 

[Deacon]

... Republicrat or Demican, they are all establishment types and cut from the same cloth. .

LOL, I called them "Retardians and Dementorcrats in a recent post.

Rob

 

[InTheLight]

Balancing the budget is NOT sufficient - we need to start reducing the National Debt

as of today - 5 Sep 17 the debt :
Total--------is about 20 billion
per citizen is about $ 60,000
per taxpayer about $165,000!!!

One step at a time, and balancing the budget is the first step. Then running surpluses.

 

[Reynolds]

Balancing the budget is NOT sufficient - we need to start reducing the National Debt

as of today - 5 Sep 17 the debt :
Total--------is about 20 billion
per citizen is about $ 60,000
per taxpayer about $165,000!!!

You mean 20 trillion?

 

[Salty]

You mean 20 trillion?

YEs You are correct - 20 Trillion - I was probably in a rush.

 

[Rolfe]

My own opinion. Governmental meddling (I think that is the word) in retirement plans undermines long-term trust in them.

 

[Reynolds]

My own opinion. Governmental meddling (I think that is the word) in retirement plans undermines long-term trust in them.

I have no trust in them to be undermined.