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Topic: this 401(k) shit (Read 799 times) previous topic - next topic

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  • el jefe
  • asleep till 2020 or 2024
this 401(k) shit
so, as part of their tax "reform" bill, the gop is considering sharply lowering the annual contribution cap for 401(k)s

http://thehill.com/policy/finance/357083-top-tax-writer-suggests-401k-changes-still-on-the-table

fyi for non-americans: 401(k)s are a tax shelter for retirement savings which are commonly used by the middle class.  people plan their lives around them.

I long assumed 401(k)s would be safe from political shenanigans, because there would be blood in the streets if congress touched them.  but the gop is talking itself into largely eliminating the middle class's main vehicle for retirement savings.  though in retrospect, I guess it makes some sense that they found themselves here.

as a bedrock principle, they want to cut taxes for rich people and big business.  it is the main purpose of the republican party.  however, enough of their members still insist on a balanced budget, that they have to pay for the lost tax revenue, somehow.  so they claim the tax cuts will pay for themselves through the magic of dynamic scoring, but too many of their own members don't buy it, given the history of such claims not panning out. 

so they could try spending cuts.  however, none of the options work.  they sort of realize that cutting rich people's taxes and paying for it with cuts to entitlement would be politically risky, so too many of them don't want to do that.  defense is a magical special area that it would be unpatriotic to cut; spending 10 times the rest of the world put together would be irresponsible when we have the option of spending 20 times as much.  and non-defense discretionary has already been cut so deep during the tea party years, that even tea partiers on the appropriations committees were starting to push back and say this is getting ridiculous.

thus, by process of elimination, they have talked themselves into paying for their tax cuts for rich people and big business by mostly closing a middle class tax shelter.

this is so dumb and obviously perverse, both as policy and politics, that I have to think they won't actually do it.  that they are even considering it shows desperation, I think.  I smell the same desperate, flailing stupidity that led to crap like skinny repeal of the aca and reasoning like "here, pass this garbage bill now - we promise we'll fix it later."

Re: this 401(k) shit
Reply #1
The whole goal of all of this is to eliminate class mobility and protect the mostly white upper class from being watered down by the rest of us.

Don't view this as misled ideologues who are stuck between a rock and a hard place. This is part of their mission.

Re: this 401(k) shit
Reply #2
This may be one thing that even the teabillies would revolt against. It would also effectively raise the taxes on the middle class, quite directly, and if there's one thing that makes for really bad optics for the GOP, it's raising taxes. They made that bed themselves, so it will be interesting to see how it shakes out.

I do hope, though, that those who are opposing this frame it as raising taxes on the middle class.

  • ksen

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #4
https://www.theatlantic.com/business/archive/2017/10/trump-401ks-retirement-savings/543822/
this strikes me as one of those things where you can read different truths into the same statistics:
Quote
Moreover, President Trump's newfound concern about 401(k) plans doesn't reflect a genuine commitment to helping low- and middle-income workers save for retirement. The primary beneficiaries of traditional 401(k) plans and other tax-deferred retirement accounts are not the "middle class": Rather, the Treasury Department estimates that half of the tax benefits of these accounts go to households in the top tenth of the income distribution. A mere 3.5 percent of the benefits go to families in the bottom half.
ok, but the fact that half the benefits go to the wealthiest 10% doesn't mean some larger swath doesn't still significantly benefit from them.  if they're going to make the contribution limit tied to income level, etc., that could be a lot better.

also, glad to hear they're more interested in "rothicizing" the contribution limit rather than lowering it, as a budgeting gimmick.  but that is still terrible and still screws people on the bottom for the benefit of people on the top.

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #5
The whole goal of all of this is to eliminate class mobility and protect the mostly white upper class from being watered down by the rest of us.

Don't view this as misled ideologues who are stuck between a rock and a hard place. This is part of their mission.
it certainly would have the effect of hurting class mobility, which scares me.

Re: this 401(k) shit
Reply #6
While your analysis is legit, it's worth pointing out that 401k was originally a tax shelter for the rich and is in general a shit vehicle for middle class retirement security.

However, it is the vehicle we've got.
Love is like a magic penny
 if you hold it tight you won't have any
if you give it away you'll have so many
they'll be rolling all over the floor

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #7
they are now proposing partly eliminating the state tax deduction
http://www.reuters.com/article/us-usa-tax-brady/u-s-house-tax-chief-says-state-income-tax-deduction-will-not-remain-idUSKBN1D025L

it is one of two main mechanisms being considered to make up lost revenue, the other being the 401k thing.  unlike the 401k proposal, which screws the middle class to help the rich, this proposal screws blue states to help red ones.  blue states tend to have higher state taxes, so their residents benefit more from the state tax deduction.  so undoing the deduction screws them.

they have scaled this back from the original proposal of eliminating the deduction entirely, so that now they are keeping the deduction for property taxes in particular.  since the group that would benefit from this carve out would be homeowners and anyone in the homebuilding business, guapo says this is aimed at placating the influential homebuilders lobby, which declared war on this bill the other day.

suspect this idea will go away, under pressure from blue state republicans, whom the gop needs to keep their majorities.  also, given the political similarity to graham-cassidy's subsidy cuts, there may be principled (or at least "principled") resistance from people like rand paul, who criticized graham-cassidy as "nothing more than republicans sticking it to democrats".

Re: this 401(k) shit
Reply #8
Also, corporations would still be allowed to deduct state taxes.

Re: this 401(k) shit
Reply #9
lol of course

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #10
like the 401k thing, it is so obviously perverse, the fact that they're even considering it smells desperate to me

Re: this 401(k) shit
Reply #11
I'll be surprised if they can get anything more than Bush Tax Cuts Redux passed.

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #12
thing is, obama made the bush tax cuts permanent for everyone making under 400k.  so bush tax cuts redux would mean only cutting taxes for people making over that.  and there are a bunch of republicans saying they don't want to cut taxes for millionaires, so it might just be something like the 400k-1M range.  that would look bad, without pleasing the megadonors, yet (I'm guessing) still put a substantial dent in revenue.  it would check none of the boxes.

I think if they get something through, it will actually look sort of like what they have now, but watered down all around.  more of a tax trim for high earners and business, with only partial elimination of state tax deductions and some 401k limits tied to income level.

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #13

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #14
lol, trump thinks he's going to get a tax bill by Christmas

http://thehill.com/homenews/administration/358021-trump-wants-to-sign-tax-bill-by-christmas

I remember when obamacare was going to be repealed by like march.  I'm sure they will finish this more difficult task in less time than it took them to fail at the last one.

  • ksen
Re: this 401(k) shit
Reply #15
tbf the more you do something the better you get at it

Re: this 401(k) shit
Reply #16
lol, trump thinks he's going to get a tax bill by Christmas

http://thehill.com/homenews/administration/358021-trump-wants-to-sign-tax-bill-by-christmas

I remember when obamacare was going to be repealed by like march.  I'm sure they will finish this more difficult task in less time than it took them to fail at the last one.

Oh Donnie, Santa isn't real, you know that, right?

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #17
the grand rollout of the tax bill was delayed at the last minute, for at least a day and a half

http://thehill.com/policy/finance/358112-gop-to-release-tax-bill-wednesday-but-it-wont-be-final

the relevant chairman insists this is not a sign of any problems whatsoever and everything is awesome

while I have no reason to doubt his effusive optimism, it seems relevant to note that there are major and possibly irreconcilable disagreements among republicans about even the general outline of the bill, and it has been in a state of flux lately

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #18
http://thehill.com/homenews/senate/358134-gop-senators-fear-bill-will-be-cast-as-gift-to-rich
Quote
GOP senators fear bill will be cast as gift to rich
yeah, someone who doesn't know better could misinterpret it that way

Quote
A Reuters-Ipsos poll released last week found that less than a third of Americans support Trump's tax plan.

The survey found that 63 percent of Republicans said deficit reduction is more important than tax cuts for corporations, and 75 percent said it was more important than tax cuts for the wealthy.
you are going to fail, you worthless, stupid, sociopathic shitstains, and it will be glorious

Re: this 401(k) shit
Reply #19
Would be nice to have a balanced budget though.
Love is like a magic penny
 if you hold it tight you won't have any
if you give it away you'll have so many
they'll be rolling all over the floor

Re: this 401(k) shit
Reply #20
Nah

  • el jefe
  • asleep till 2020 or 2024
Re: this 401(k) shit
Reply #21
the salient thing with the last part I quoted is that gop voters apparently disagree with the general idea of this tax bill (though whether they know they disagree with it is another question).  given the choice between balancing the budget on the one hand, and cutting taxes for rich people and business otoh, they choose the first one.  this bill does the second.

I am guessing the 30% or so who support the bill either 1) have been lied to about what it does, or 2) still believe in reagan's pseudo-economics and therefore don't see the contradiction between cutting taxes and balancing the budget, or 3) hear trump's name and forget about all the merits and go into partisan tribal mode, viewing the bill as a battleground between Us and Them.

  • ksen
Re: this 401(k) shit
Reply #22
Would be nice to have a balanced budget though.

At the federal level? Why?

At least one effect of a balanced budget would be to start collapsing the US Treasuries market.

Re: this 401(k) shit
Reply #23
Would be nice to have a balanced budget though.

At the federal level? Why?

At least one effect of a balanced budget would be to start collapsing the US Treasuries market.
A balanced budget wouldn't eliminate the debt or stop borrowing would it? I was under the impression that a balanced budget just established the payment terms for new borrowing.  Is that a misunderstanding?
Love is like a magic penny
 if you hold it tight you won't have any
if you give it away you'll have so many
they'll be rolling all over the floor

  • ksen
Re: this 401(k) shit
Reply #24
A balanced budget implies no new debt spending. And part of the budget is paying interest and principal on current debt so eventually that debt, and all the T-Bills related to it, would go away.