I'm going to welcome myself back from my self-imposed hiatus by venturing out on a limb. I am going to say nice things about a Republican.
Mitt Romney's plan to make investment earnings tax-free for families making under $200K a year is brilliant stuff. It's a shame nobody thought of it sooner.
I don't often find much to like about the Stormin' Mormon. For my taste, he's a little too orthodox and seems to pander to corporate interests too much. But regardless of the messenger, the plan is a great idea.
Government has no business carrot-and-sticking people over their reasons for saving money. If you save money for retirement in an IRA, they'll give you a tax break. If you're saving money for a car, they won't. If you're saving money for health care expenses in an HSA, they'll give you a tax break (at least the feds will). If you're saving money to buy a boat, they won't. If you're saving money for your kid's college education, they'll give you a tax break. If you're saving money for your honeymoon, they won't.
It's positively stupid the way that state and federal government try to entice you to save money for things it deems desirable. All it does is muck up the tax code and create confusing barriers for individuals looking to save. Suddenly, that person with an extra grand at the end of the year has to think "hmmm. Do I want to put this in my Roth IRA, where I can't get the gains out tax-free until retirement or unless I buy a house or go back to school? Do I want to put it in an HSA, where I can only use it for health-related purposes? Or do I want to put it in a regular investment account, where I can get to it if I need it but where Uncle Sam will hack the bejeezus out of my capital gains?"
Stupid. Stupid. Stupid.
Now, to be perfectly consistent, we would have all income, earned and unearned, treated identically. But realistically, that will never happen. There are too many goodies to be handed out by politicians to America's expanding investor class.
And so given the choice between having a blanket exemption for investment income and a bunch of separate carve-outs, the blanket exemption makes more sense, and it's targeted broadly at those with income levels where increased savings will have the greatest impact on quality of life. That keeps it affordable, which is also desirable. Balanced budgets are important too.
Saving money is a good thing, period - and it's something most Americans don't do nearly enough of these days. And when Romney said that his plan would help Americans save "without having to sign up for these nanny accounts," he's dead on.
Mitt Romney's plan to make investment earnings tax-free for families making under $200K a year is brilliant stuff. It's a shame nobody thought of it sooner.
I don't often find much to like about the Stormin' Mormon. For my taste, he's a little too orthodox and seems to pander to corporate interests too much. But regardless of the messenger, the plan is a great idea.
Government has no business carrot-and-sticking people over their reasons for saving money. If you save money for retirement in an IRA, they'll give you a tax break. If you're saving money for a car, they won't. If you're saving money for health care expenses in an HSA, they'll give you a tax break (at least the feds will). If you're saving money to buy a boat, they won't. If you're saving money for your kid's college education, they'll give you a tax break. If you're saving money for your honeymoon, they won't.
It's positively stupid the way that state and federal government try to entice you to save money for things it deems desirable. All it does is muck up the tax code and create confusing barriers for individuals looking to save. Suddenly, that person with an extra grand at the end of the year has to think "hmmm. Do I want to put this in my Roth IRA, where I can't get the gains out tax-free until retirement or unless I buy a house or go back to school? Do I want to put it in an HSA, where I can only use it for health-related purposes? Or do I want to put it in a regular investment account, where I can get to it if I need it but where Uncle Sam will hack the bejeezus out of my capital gains?"
Stupid. Stupid. Stupid.
Now, to be perfectly consistent, we would have all income, earned and unearned, treated identically. But realistically, that will never happen. There are too many goodies to be handed out by politicians to America's expanding investor class.
And so given the choice between having a blanket exemption for investment income and a bunch of separate carve-outs, the blanket exemption makes more sense, and it's targeted broadly at those with income levels where increased savings will have the greatest impact on quality of life. That keeps it affordable, which is also desirable. Balanced budgets are important too.
Saving money is a good thing, period - and it's something most Americans don't do nearly enough of these days. And when Romney said that his plan would help Americans save "without having to sign up for these nanny accounts," he's dead on.
2 comments:
One of the worst things that could happen to George's Magic Economy right now would be for people to start pulling money out of it to put in savings accounts.
There's a house of credit cards out there right now and if consumers stop spending as if the Rapture was gonna happen in the morning it'll be tumbling before long.
Which, really, might be a necessary and healthy part of our economic progress. I doubt that Americans would change their habits overnight, so perhaps this would help to take some of the air out of the bubble slowly instead of just waiting for some other unpredictable force (let's say China) to pop it altogether.
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