House Democrats Contemplate Abolishing 401(k) Tax Breaks

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With the FairTax all legislation having anything to do with taxes goes away. This thread is about employers loosing the tax incentive to make matching contributions. Under the FairTax that goes away. Under the fair tax the tax rate for capitol gains goes away. The rules for the Roth IRA goes away. Heck...IRA's go away. Deductions go away. Exemptions go away. Credits go away. 1040's go away. Schedule C's go away. ALL schedules go away. Filing deadlines go away. Extensions go away.

Just think of the manipulation that the government currently uses to manipulate me and you that they would no longer have.

This debate would also go away...
 
But the underlying point is that even with all of the tax deductions, credits, etc. someone has to pay for the programs and running of the Country. In the good and services you buy are embedded taxes from the taxes paid by the cooperations and wealthy. So in a round about way we are paying the tax no matter what.

Why not eliminate and simplify the tax code and you only pay tax on "new goods" you purchase and let the wealthy pay the larger portion of the tax when they buy a new car, yacht, plane, house, SUV, etc. They spend more because they have more therefore they will be taxed more. I spend less and will be even more frugal in my retirement years, therefore I will pay less tax if any.

Heck, I would be happy with a flat tax. It would be more fair than our current system and much more simple.
 
Of course I believe that land owners, business owners, and veterans should be the only people allowed to vote, but that is another discussion.
 
Slow me, but is this article talking about the tax deduction we as individuals enjoy with TSP by the income never showing up on our W-2, or is it the tax deduction the employer enjoys for his matching funds? Or both? Thanks
 
The fair tax or flat tax would never pass. Too may accountants and lawyers make money off the current complex system.

They would all lobby to kill anything that simplifies the tax code.

Too much money for them at stake to allow it to happen,
 
The fact is that our tax code is nothing more than social engineering. If the object is to collect money to run the government then a simple flat tax work work just fine. That was how is all started back in 1914 or so, but the social engineers started using it to encourage what they thought was important and it continues to this day. The tax code has nothing to do with collecting taxes it is a way for the congress to buy votes and social engineers to shape society to their liking.
 
James48843 said:
The fair tax or flat tax would never pass. Too may accountants and lawyers make money off the current complex system.

They would all lobby to kill anything that simplifies the tax code.

Too much money for them at stake to allow it to happen,
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Bingo, and that cost is completly passed on to the consumer.
 
You do realize that 40 million people in this country pay no tax - they receive money from the earned income tax credit and the more children the more money. This is what they call redistribution and it was a Gore pet project. I had a young divorced mother of two who worked for me that would intentionally take time off to keep her salary below a certain level because she would make it all up later in a bulk payment from the earned income tax credit - it pays not to work. There was a whole circle of these folks that played this program - they informed each other about the benefits.
 
Birchtree said:
You do realize that 40 million people in this country pay no tax - they receive money from the earned income tax credit and the more children the more money. This is what they call redistribution and it was a Gore pet project. I had a young divorced mother of two who worked for me that would intentionally take time off to keep her salary below a certain level because she would make it all up later in a bulk payment from the earned income tax credit - it pays not to work. There was a whole circle of these folks that played this program - they informed each other about the benefits.
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YES! I agree and my tax liability for 2006 was under $200. I used the system. The system that is broke.
 
saturneptune said:
Slow me, but is this article talking about the tax deduction we as individuals enjoy with TSP by the income never showing up on our W-2, or is it the tax deduction the employer enjoys for his matching funds? Or both? Thanks
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Not sure but I figure both.
 
Birchtree said:
You do realize that 40 million people in this country pay no tax - they receive money from the earned income tax credit and the more children the more money. This is what they call redistribution and it was a Gore pet project. I had a young divorced mother of two who worked for me that would intentionally take time off to keep her salary below a certain level because she would make it all up later in a bulk payment from the earned income tax credit - it pays not to work. There was a whole circle of these folks that played this program - they informed each other about the benefits.
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The way I understand it the Republicans were the ones that thought it up.

http://www.irs.gov/pub/irs-pdf/p596.pdf

The table starts on page 44 and the max credit is on page 46 then the credit starts going down from there with income from 11250 to 12750.
 
If the tax break goes away for corps., why would they offer matching funds? Very bad for private sector, IMO. No change for me, I have a contract.

IMO, in the long run it will not effect me as much as it will effect the private sector.

If I remember right when the Clinton's were President did they not kick around the idea of doing a one time taxing all 401(k) and Ira plans to pay down the debt?
 
It's not spread the wealth, all he said was he was not raising taxes for those making under $250K. It's raising revenue to slow down borrowing (I do NOT have the illusion that we will be paying back anything sustantial in the short run).

401(K) tax break abolishment yes, that's short sighted, after all the money is eventually taxed. It will just lead to more people not saving for their retirement, especially with the returns most people are getting right now. I suspect I'm not the only one with skin in TSP right now due to deferred taxes and matching - it's definately not for the returns in G.
 
Yeah I know, some of you are going to be saying, there goes that crack pot CB seeing boogie men under his bed again, but here is another article of the Dems plan for our and the rest of us Americans 401K retirement funds. :nuts:

http://online.wsj.com/article/SB122477680834462659.html

I know some of you think this will never occur, and I hope you’re right, but here’s another article about the Dems plan to plunder or retirement moneys and if they get their wish, they’ll have complete control of the legislative process and nothing can stop them and since their pensions are impacted, well they could really care less about us. They’ve already proven that.

This is real and meetings have already been held on this robbery. What better way to make SS solvent than by stealing everyones 401 K retirement money and put it in SS Version 2.0 and then dole the money out to us in the amounts they think we deserve, regardless on how hard we worked to increase our families retirement funds. This is one of their core beliefs. :mad:

I’ll be meeting with my financial advisor and ask him what can be done to protect our future money, if this would occur. I have no problem stopping my TSP contributions, since I'm over a year ahead of my funding schedule, for a year until this shakes out, especially if I can put the money elsewhere, that will give me a bigger return than 3 to 5%, which are the numbers I’ve been reading or hearing. I’m getting a bigger return on most of my stocks via divvies than that. The only thing that really makes the TSP attractive is the matching funds, but hey, if the TSP no longer exists, then nor do the matching funds.

I will be contacting NARFE about this, but I'll not waste my time and effort on my elected officials. I've come to the conclusion, they are greedy self serving bastards, that consider us nothing more than chattel.

I know some of you think I'm off my rocker, but I wonder now many Jews and good German people thought that what happened to them couldn't happen either back in the 30's?

CB
 
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http://www.fedsmith.com/article/1752/ said:
The underlying philosophy behind the system is apparently due to a philosophical dislike of allowing wealthier Americans (such as Federal employees) to benefit from a tax-deferred system such as that used by the TSP system.
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Since when are wealthier Americans Federal employees? In my field, the pay for Federal work is less than private sector (without adjusting for risk of course).
http://www.fedsmith.com/article/1752/ said:
A wealthy family in a 35% tax bracket gets a tax break three-and-a-half times more valuable than a family in a 10% tax bracket, even if each family contributes the same dollar amount to a 401(k).
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Blatant misrepresentation of the numbers here. The reason a tax break for wealthy family in a 35% tax bracket is more valuable than one in the 10% tax bracket is because they are paying more in taxes than the 10% family. It is all about the income levels and nothing about the tax break.
 
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