No one talking about My RA?

Ahhhhhh, I see:
The MyRA account offers a solid, entry-level plan to get people started. Unfortunately, the president has made a separate proposal that could crimp retirement savings for those further up the income ladder.

The White House has said the tax advantage that underpins all retirement savings has been too generous for those with lots of wealth to set aside during their working years. So he's calling on Congress to scale back tax breaks for wealthy households when they sock away money in a tax advantaged retirement account.

(Read more: The tiny change that made AT&T almost $8 billion)

According to the White House, some two-thirds of tax benefits for retirement saving go to the top 20 percent of the income ladder, and one-third goes to the top 5 percent.
Obama wants to limit the tax benefits to those top earners to 28 percent of what they set aside. And he's proposing a cap on tax preferred savings accounts of $3.2 million, which the White House thinks is all anyone needs "to fund a reasonable pension in retirement."
 
gilesfan said:
some two-thirds of tax benefits for retirement saving go to the top 20 percent of the income ladder, and one-third goes to the top 5 percent.
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That's a legitimate, problematic inequity. Not sure why you all are crowing about this.
 
gilesfan said:
You mean people benefit from saving more? Oh the humanity!
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People in a position to grow ample savings benefit enough already without receiving additional tax-breaks simply and solely for their largesse.
 
Benefit by paying the large majority of taxes in the country and paying a higher tax rate simply from being successful?
 
sturg33 said:
That nutjob Ron Paul saw this one coming

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Why is this tax break different than any others? Why should people get a tax break for something they were likely to do anyway?

People always talk about broadening the tax base, lowering the rate, and get the government out of messing with the economy . . . until, of course, the base-broadening includes something they are taking advantage of. A tax expenditure is a tax expenditure and IRAs haven't boosted the individual savings rate, which has been in decline (with an uptick due to the economic downturn of the mid-00s) since they were created in 1986.

No one is confiscating IRAs here.
 
gilesfan said:
Benefit by paying the large majority of taxes in the country and paying a higher tax rate simply from being successful?
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It's shortsighted thinking like that that leads to big problems. Yes the rich pay the large majority of income taxes, because they make the large majority of the money. That's really not shocking. Under any form of an income tax they'll spend the most because they earn the most.

What the problem is that as jpx pointed out the current tax system greatly benefits the very rich. When I say very rich mind you I'm not talking about you or AA who make good incomes but people who make way more than the top 1%. While the republicans have successfully conned you into thinking this is a war on people who've earned their money, they don't talk about the other tax benefits that come with being rich.

Here's a figure based on the quintiles and what they pay in payroll and excise taxes as a part of their income in 2007

5-26-11tax-f2.jpg


The same regressive trend exists on state levels as well

5-26-11tax-f3.jpg


The idea of the "burdened" tax payer does exist, but it's not the wealthy.

One more graph just for fun, this is the total tax bill federal and state broken into quintiles but expanded upon in the top 90%.

total-tax-bill-income.jpg


There's a stiff rise as you make money up til the highest quintile. The highest quintile starts at about 100K. Basically meaning that until you earn over 100K you're paying out the nose the more you earn. When you hit the 80th percentile things start to slowly go up, not at the stark increase you see when you first look at the graph.

There's barely an increase going from 90-95 to the 95-99 then a drop off for the top 1%. Basically the top 10% garners a more favorable take

More food for though, from 2000-2009 the effective tax rates of folks earning 200K+ adjusted gross income as part of their group.

37.2% had an effective tax rate of 15-20%, 30.5 20-25, 16.7 25-30 and 10 at 10-15. Basically the rich pay more in taxes that is true, but it's not by some astronomical account when you factor in their income.

I think the american tax code is very backwards and while the income tax is progressive to a point, it's the only tax that is, the capital gains is regressive, retirement taxes are regressive, and so on so forth.

Basically the rich have us by the balls, you can choose to embrace that I choose to feel disgusted by it.
 
gilesfan said:
Benefit by paying the large majority of taxes in the country and paying a higher tax rate simply from being successful?
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That really is unfair. Maybe some really rich guys should get together and drop hundreds of millions of dollars into think tanks and PACs devoted to convincing everyone that really rich guys get a raw deal in america.
 
2 more graphs, because I love them.

First is simple, shows financial wealth of the top 20% vs the bottom 80%

financial_wealth_pie_chart.png


And one more, this tracks productivity and median family income (aka the middle class)

productivity_family_income.png


Basically the american worker is more efficient than ever and being paid less for it. And show of all shocks, it started about the time as Reaganomics. Shocker that crony capitalism would have that kind of effect.
 
This graph basically tells it all. It's not fair to say the rich don't pay their share of taxes. As a matter of fact, they pay an amount way more than the poor does.

total-tax-bill-income.jpg


The people that get hurt are in the middle.
 
Why should the U.S. govt penalize me for putting money away towards my own retirement account? I will never see a dime of the thousands and thousands I've paid in social security in my lifetime. That is likely a lot more than what I have in my retirement right now. Think I paid somewhere close to 10k in social security this year. Will never see a dime of that.
 
gilesfan said:
No sound on my cpu Im working on bc of snow. The My RA isn't IRA confiscation is it?
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Confiscation implies that the entire amount would be taken by the government. It appears (and I haven't read it that closely) is that what Obama is proposing is that the tax advantage be reduced or eliminated. That is something different.

This argument was around when the IRA as part of the tax reform of 1986. They got rid of a whole bunch of deductions and credits (did you know that you were once able to deduct your credit card interest and the sales tax paid in your state?) and created a couple of new ones, including the IRA. I was doing my grad paper on tax reform at the time and the arguments are the same now as they were then. There was hope that the IRA would move taxpayers from consumption to savings (it hasn't). The other suggestion at the time was to allow taxpayers to deduct interest earned in savings accounts up to a certain limit, which would have probably had a more universal benefit than IRAs, but that was not the route chosen.

If it would have been me giving suggestions, I wouldn't have gone down this road at all. Don't create the deduction and drop the marginal rates further. I think the IRA had some additional steam from those who wanted to curb the growth of Social Security and that needs to be factored into the political calculation of why they were established.
 
Are you not paying attention? Where the top 1% has a lower effective tax bill than the people in the 80-90? What world does that make sense?

Yo're right the people in the middle get hurt, but in what way is what you're advocating (people who earn their money should keep it) is good for the middle class?
 
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