(FeaturedNews.com) – The US House of Representatives passed a new bill seeking to help Americans with retirement savings. The Secure 2.0 Act made it through the House on March 29, but the Senate has not yet set it for a vote. At the same time, President Biden is working on his 2023 budget, which seeks to increase taxation on the wealthiest Americans. The comparison of the two bills creates some confusion on the exact goal of Democrats when it comes to taxing the rich.
The Secure 2.0 Act
The new legislation moves the age at which the government can begin to tax retirement accounts from 72 to 75. The change gives high-income earners three more years to defer tax payments and allows tax-free growth.
To combat the loss in tax revenue that will occur, the bill allows the government to count money made through Roth retirement account taxes early. Despite the fancy accounting, it will increase the deficit without further legislation because having people pay tax right now means they won’t pay when they withdraw. So, in 10 years, the move will create a new problem.
The retirement age aspect of the legislation is also not as good as it seems. Most people draw retirement much earlier than 72, so the expansion is only beneficial to those in higher earning brackets who don’t need to live off their retirement investments.
The Democrats did remember to include a couple of points targeting middle-income earners. The act has a tax credit expansion and a mandate for auto-enrollment for employer-based plans.
In a tweet, Daniel Hemel of the University of Chicago classified the bill as “a deeply cynical deficit-expanding giveaway to high-income taxpayers disguised as a set of budget-neutral middle-class savings incentives.” He accused Democrats of putting on a show with this legislation so they can say they’re helping out the average American without acknowledging this act benefits the wealthy more.
The retirement savings legislation in question–"SECURE Act 2.0"–is a deeply cynical deficit-expanding giveaway to high-income taxpayers disguised as a set of budget-neutral middle-class savings incentives. Progressives & deficit hawks alike should say no to this gimmickry 1/ https://t.co/ArfDSyDAgL
— Daniel Hemel (@DanielJHemel) March 7, 2022
Biden’s Budget
At the same time Democrats are trying to move the Secure 2.0 Act into law, President Joe Biden is working on his 2023 budget, which targets high-income earners with new taxes. The proposal would assess a minimum tax of 20% on individuals worth more than $100 million. It also requires the payment of taxes on future gains.
The plan sets out to ensure wealthy Americans pay as they go like everyone else when it comes to taxation. It fits the rallying cry of progressives that rich people need to pay their fair share.
The message coming from the Democrats is confusing. Do they want to offer breaks to the wealthy or make them pay their fair share? Perhaps they’re trying to mitigate the effects of one measure with another. Might this fancy footwork by the Left be a trick to make voters think they want to punish the rich and provide breaks for the middle class?
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