Important Takeaways:
- Economists from the left and right call for 401(K) tax benefits to be AXED to help fund Social Security benefits
- Tax benefits on 401(K)s should be axed in favor of higher Social Security payments, says a report co-written by a former aide to President Clinton.
- Alicia Munnell, who served as an assistant Treasury secretary from 1993 to 1995, claims retirement pots with tax breaks disproportionately benefit the wealthy.
- She made the claim in the report co-authored by right-leaning economist Andrew Biggs – where they say such benefits have done little to incentivize workers to save more anyway.
- Cutting the perks on 401(K)s and Individual Retirement Accounts (IRA) could save the Government almost $200 billion, they argue – and that windfall would be better used plugging shortfalls in Social Security payments.
- The paper – ‘The case for using subsidies for retirement plans to fix social security’ – has attracted a widespread backlash with one retirement expert labelling it a ‘preposterous idea’ since being published last month.
- One user wrote: ‘If you take away the tax benefit, who the hell is going to save to a 401(K) anymore? This would get people to save less and rely on the government more.’
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