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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (98650)	2/4/2005 1:02:24 PM
From: Snowshoe	Read Replies (1) \| Respond to of 793690

>>how can rate of taxes on retirement become a monster<< I said the issue could become a monster, not the rate. The issue is the TRILLIONS of dollars of deferred income in IRAs, 401Ks, etc. It's enough to pay of a huge chunk of the national debt, and there's several ways it could become an issue. The proposed new private accounts raise the stakes. Here are a few potential issues I see... 1) Right now SS benefits are exempt from Federal taxes when total income is below a certain level, but IRA/401K benefits are fully taxable. The proposed private accounts seem to fall in a gray area in between. Does anyone know if the benefits will be treated by the IRS like the current SS benefits, or like IRA/401K benefits? I expect that this detail could be fought over. Why should someone with a private SS account get a better tax deal than someone with an IRA/401K? 2) Any attempts to further reduce personal income tax rates via flat tax, national sales tax etc need to be considered in light of the massive potential revenue from the trillions of dollars of deferred income currently held in IRAs and 401Ks. The government needs this revenue to pay off the huge federal debt. But if baby boomer retirees with the new private accounts are squeezed by inflation, then Congress could come under political pressure to provide relief by lowering tax rates on retirement income from IRAs, 401Ks, and the new private accounts. So we'd be back to the same old politics in a slightly different guise.