Tough on Tax Breaks? Members of Congress gathered Tuesday to begin considering changes to the U.S. tax code. Great, right? Everyone agrees the American tax code is absurdly complicated and could use some reforming. Unfortunately, that's where the agreement tends to end. Overhauling the tax code-which could begin as soon as next year-is bound to bring difficult trade-offs. Just consider one of the first area lawmakers are targeting: Tax breaks on retirement savings.
According to the Washington Post, tax incentives for employer pensions, 401(k) plans, individual retirement accounts and other retirement savings programs rank among the largest breaks in the tax code, costing more than $200 billion a year in lost revenue. On Tuesday, Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, scheduled a hearing on these "tax-favored retirement accounts," and discussed how savings provisions could be streamlined.
Today's hearing isn't about drawing conclusions," Camp said, but about "making sure that as Congress approaches comprehensive tax reform that we do so well-armed with information."
Camp did not suggest cutting any tax incentives yet, but House Democrats argued that's what's in store if you read between the proverbial lines.
Tax-preferred retirement savings accounts provide bigger benefits to wealthier taxpayers, according to Judy Miller, director of retirement policy at the American Society of Pension Professionals and Actuaries. But about 70 percent of middle-income workers also benefit from the breaks.
Wednesday Quick Hits:
- The Colorado Rockies' Jamie Moyer, 49, became the oldest pitcher to ever win a major league game, after throwing seven strong innings against the San Diego Padres Tuesday night.
- Using life insurance to fund your retirement? Certain types of life insurance policies, known as permanent or cash value insurance, offer guaranteed interest rate, tax-free savings and fairly simple withdrawal policies.
- Medicare patients who reach the gap in prescription drug coverage known as the "doughnut hole" are 57 percent more likely to stop taking heart medications, according to a new Harvard study.
- U.S. News & World Report offers reasons why folks might want to consider Cuenca, Ecuador, for retirement. [We've got more on affordable foreign retirement destinations here.]
- And will redesigns of classic cars-the Ford Mustang, Volkswagen Beetle, Chevrolet Camaro-turn off older consumers?