Why is Obama punishing retirees and savers?
posted at 5:53 pm on May 1, 2013 by Ed Morrissey
That’s a good question, one posed by my colleague at The Fiscal Times, Liz Peek. In Barack Obama’s budget proposal, tax-deferred contributions to IRA or 401K retirement plans would be capped at $3 million — even though the savings rate in the country fell to 2.6% in Q1, the lowest since before the Great Recession:
This particular effort to “level the playing field,” as Obama is so fond of saying, will hit those who work hard, reap the rewards, and save aggressively. It especially sends the wrong message to young people. An analysis by the Employee Benefit Research Analysis suggests that anywhere from 1 percent to 6 percent of workers age 26 to 35 might ultimately hit the cap, depending on investment returns, asset allocation decisions and other variables.
What is the point? The proposal is expected to save the government only $9 billion over the next 10 years – a drop in the budget bucket. This suggestion is not aimed at balancing our books, but at preventing the industrious from getting ahead. This, at a moment when it is clear that the nation should be promoting, and not discouraging savings, when Social Security looks likely to become another welfare program rather than a broad-based retirement account, and when the government boasts about reducing – not adding — red tape. And when, by the way, young people have been scorched by the financial crisis and are skittish about investing. Young people who live in a time that celebrates conspicuous consumption and not thrift. …
President Obama is offended by the growing gap between rich and poor, a worrisome trend. His remedy – and seemingly lone economic goal — is to raise taxes on the wealthy, which this year will be the highest since 1979, when the Tax Policy Center started keeping track.
Taxes on top earners will be even higher yet next year, thanks to Obamacare. Instead of building up middle class wealth through growing jobs and the economy, Obama wants to slash income at the top. This proposal for a first-ever cap on tax-deferred savings accounts is more of the same – meager policy and a bad idea.
He just wants more income to tax.