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NEW - In 2016 the 2-4-8 Tax Blend will become 2-4-8 Tax Choice
The "choice" would allow all taxpayers to choose an income tax rate between 8% and 28% paired with a net wealth tax rate of 2% going down to zero. Wealth taxes paid would reduce Estate and Gift taxes (also set at 28%). This would encourage wealthy individuals to pay some net wealth taxes as a form of inexpensive life insurance.


C - Corp
4% VAT
8% Income

Advisor One, Feb. 16, 2012

No Tax Reform Without Incentives for Retirement Savings

Argue 2 Congressmen at Washington event

Republican and Democratic congressmen push resolution to retain current tax incentives

by Melanie Waddell

... Reps. Jim Gerlach, R-Pa., and Richard Neal, D-Mass., both members of the House Committee on Ways and Means, introduced a joint resolution on Thursday that would make it the "Sense of Congress" that current tax incentives for retirement savings should be retained in any reform of the tax code. ... Neal also introduced two other bills—an auto IRA bill and a bill to simplify and enhance qualified retirement plans called the “Retirement Plan Simplification and Enhancement Act of 2012”

...  Putnam research has found that “workers who have access to workplace savings plans and participate in the plan and defer 10% or more of income are on track to replace 100% of income once you add in Social Security.”

2-4-8 Response: Tax Free Retirement Plans May Go too Far

Even a well intentioned “joint resolution … that would make it the ‘Sense of Congress’ that current tax incentives for retirement savings should be retained in any reform of the tax code” can have unintended consequences. The projected 10-year growth of Social Security (about 25 billion a year) and Medicare (about $20 billion a year) and the fact that the government is running on borrowed money is a problem that needs to be addressed.

The Social Security and retirement programs should be viewed as part of a coherent federal package. Suggested fixes for social security have not been found. Lowering the amount of benefits is not very popular with those already living near the poverty line. Delaying the retirement eligibility age on the rational that people are living longer is not fair to those that are less likely to live as long (i.e. males, minorities, overweight, smokers, hypertension, etc.). When seniors work into their golden years it also has the unintended consequence of there being fewer jobs for younger workers.

One solution that has not been fully explored is that of cutting back a bit on tax exempt retirement programs – (those in addition to social security). Since the 1974 Employee Retirement Income Security Act (ERISA) employers and workers have participated in a wide range of tax exempt retirement programs. There are 90 million people with $17.5 trillion in retirement assets (a household median of $100,000).

A question arises as to what public savings might be achieved by ending the retirement tax saving holiday for those who don’t really need it. The tax subsidy might be ended for those with private wealth that will effectively match the maximum social security amount. It’s not that $40,000 or $50,000 would be a lavish income. Rather it is a matter of fairness to suggest that other taxpayers should not be subsidizing more than a basic retirement life style (I call it the Social Security times two level). By taxing surplus accumulated retirement money that has never been taxed and by halting tax exempt participation when that level is reached, the expanded tax base would produce significant additional revenue. For example, it would only take an expanded tax base of $3 trillion to produce $45 billion a year at a 15% tax rate.

A more stable long range solution would require a bold reform that expands the tax base for all. I call it the 2-4-8 Tax Blend and it is described at www.TaxNetWealth.com.

Eugene Patrick Devany, JD, MPA


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Copyright 1985 to 2015 by Eugene Patrick Devany