On the Center for American Progress’s Proposed Plan for Retirement Savings
September 6, 2013
There are many things to like about the Center for American Progress proposal for American retirement saving. They pay attention to the high burden of management fees. They acknowledge that Americans don’t save enough for retirement. They understand the difficulties of annuity pricing on the individual market.
They also recognize the importance of tax treatment. Their retirement plans would get around investment taxation, similar to the way a 401k plan does. Taxing the account more than once is non-neutral. It subjects saving to a higher tax burden than the burden on immediate consumption, discouraging retirement saving and making it more difficult. CAP is right to want this sort of tax status for their retirement plan.
But why stop there? Why not allow that tax treatment for Americans who want to save for other purposes? Some people need to save to get together a down payment on house. Some people save to plan for a wedding. Some people save to start their own business.
Tax-neutral saving should be for everyone, not just CAP’s pet projects.
Was this page helpful to you?
The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?Contribute to the Tax Foundation
Let us know how we can better serve you!
We work hard to make our analysis as useful as possible. Would you consider telling us more about how we can do better?Give Us Feedback