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Senate retirement bill benefits wealthy Americans – Portland, Oregon

Portland, Oregon 2022-06-24 09:55:21 –

((((Hill) — The retirement bill currently under negotiation in the Senate will give wealthy Americans a tax cut by advancing payment schedules to maintain revenue neutrality within a 10-year budget, but future Congress will raise taxes. Unless you do, you will eventually increase your country’s deficit.

The Senate’s Enhancing American Retirement Now (EARN) Act raises the age at which taxpayers must begin withdrawal from 72 to 75, allowing for an additional three years of tax exemption growth.

Most Americans start living on a severance pay account well before the age of 75. Therefore, raising the age requirement actually only affects wealthy people. old age.

The bill gives rich taxpayers and Wall Street fund managers who manage their money another bone by allowing an additional $ 10,000 a year to be deposited in retirement accounts between the ages of 60 and 63. Throw it. Years are something most Americans can’t afford.

To pay for these tax cuts, the law does not raise taxes elsewhere. This avoids the problem by allowing participants in the retirement plan to choose the Roth IRA instead of the traditional IRA.

With your Roth account, you pay taxes when you deposit money, not when you withdraw it. This will generate income within the statutory budget, but it means that tax cuts will not actually be paid in the long run.

“These payments are the same as the payments for the retirement bill that passed through the House of Representatives,” said Stephen M. Rosenthal, a senior researcher at the Tax Policy Center, a left-wing Washington think tank, in an interview. I’ve seen all the gimmicks, and the Ross IRA is the worst. ”

“This is a terrible use of budget scorekeeping rules,” Rosenthal added. He further lamented that the traditional notion of fiscal responsibility these days seems to exceed the capabilities of both Democrats and Republicans.

“Today’s Republicans are very different from the fiscal conservative Republicans of long ago. Republicans are debt and spending, Democrats are taxes and spending. But in reality, tax cuts are not rewarding on their own. It’s often easier to build bipartisan support around something to borrow and make it happen than taxes, “he said.

Papering long-term revenue losses through fancy accounting may not be too much of a hassle for economists when interest rates are zero, but post-pandemic high inflation raises interest rates and tightens overall monetary policy. started.

“Inflation is well above our long-term target of 2-3% and the labor market is so tight that we raised the federal funds rate target range and raised the target by 1.5 percentage points at each of the last three meetings. The range so far this year. ” “The Commission reiterated that it expected continuous expansion of the target range to be appropriate.”

This could mean that long-term deficit expansion measures, such as Congress’s retirement package, would be a greater burden for taxpayers 10 years from now.

The House version of the Senate retirement bill, known as Secure 2.0, was the second major retirement bill to pass Congress in just three years. It received nearly unanimous support and 414-5 votes, with all current Democrats voting in favor of the bill, and the most conservative Republicans, including HouseFreedom Caucus Chairman Andy Biggs (R-Ariz.). Only some of them voted against.

Wall Street is in favor of the bill, as money managers are paid in the form of fees, and as money in the severance pay account increases, money manager fees increase.

The American Bankers Association, National Association for Fixed Annuities, Insured Retirement Institute, and other financial and retirement industry associations include Senate Finance Commission Chairman Ron Wyden (D-Ore.) And Ranking Member Mike Crapo (R-Idaho). ) Thank you for the legislation. In a June 21st letter posted by the US Chamber of Commerce.

“Talk to a member of parliament who is a member of the committee. They used this because they don’t think it was a gimmick. This is a fully paid invoice. Pay to pass. Is needed, and that’s the rules of Congress, and these are the mechanisms they came up with, “said Paul Richman, Head of Government and Political Affairs at the Insured Retirement Institute, a lobbying group in the retirement industry. In an interview.

In a letter to Weiden and Klapo, Robbie urged the swift passage of the bill, stating that “the Commission’s dedication to retirement security is an important step in finalizing the retirement law during this meeting.” wrote.

Although targeted at wealthy Americans, both the House and Senate retirement packages include an average household allowance that withdrew approximately $ 67,500 in 2020. This is about 3% lower than the median income of about $ 70,000 in 2019.

This includes expanding tax credits for savers. It subsidizes retirement account contributions by giving low-income or middle-income level people a 50% government match for contributions of up to $ 2,000.

“Adding $ 1,000 a year could slightly increase the account balances of low- and middle-income households, but it’s still far less than the new incentives for the bill’s high net worth individuals,” said Head Frank. Clemente says. The Americans for Tax Fairness, a left-handed advocate, wrote to Weiden in a letter on June 21st.

His group also appreciated the fact that the Senate’s EARN law “leads to workers’ participation in the 401 (k) and 403 (b) severance pay schemes.” [by] Encourage employers with tax deductions to automatically enroll workers in retirement plans (unless the worker opts out) and pay employee student loans for the employer to match contributions Allows you to consider. ”

However, Clemente writes that these improvements are “minor” and only “moderately” useful to “low and middle-income earners who are less secure in retirement.”

“The severance system is upside down. It rewards those who don’t need it and rarely those who need it,” said Rosenthal of the Tax Policy Center. “But of course, the retirement industry complex is very powerful.”

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