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(snip)"WEBSTER CITY, Iowa (AP) - Democratic presidential candidate Hillary Rodham Clinton proposed tax cuts of up to $1,000 a year on Tuesday to encourage millions of working-age families to open personal 401 (K) retirement accounts.
The New York senator said the program would be paid for through higher estate taxes.
At the same time, Clinton said she has given up another idea for a savings incentive—giving every baby born in the United States a $5,000 account to pay for college or a first home.
Instead, she said, her plan for what she called "American Retirement Accounts" will provide "universal access to a generous 401(K) for all Americans."
She outlined a program in which the government would provide a "matching refundable tax credit—dollar for dollar—for the first $1,000 of savings done by every married couple making up to $60,000 a year."
Families with incomes of up to $100,000 would receive a smaller tax break to spur them to contribute to a personal 401(K).
"This means tens of millions of middle-class families will get matching tax cuts of up to $500 and $1,000 to help them build a nest egg for retirement," said a fact sheet distributed by the campaign.
Higher income earners who don't have employer-sponsored plans could participate, but they would not receive tax breaks and the contributions they make would count against the IRA contribution limit.
Clinton proposed freezing the estate tax at projected 2009 levels to pay for the tax cuts. Her campaign said that would mean estates of more than $7 million per couple would be subject to taxation.
At a cost of $20 billion-$25 billion a year, the plan is Clinton's largest domestic proposal other than her plan for universal health insurance.
Clinton first mentioned a so-called "baby bond" last month in an appearance before the Congressional Black Caucus, saying it was just an idea and not a policy proposal. The idea was criticized by Republicans, and she told The Wall Street Journal in an interview published Tuesday that it's off the table.
The campaign of her Democratic rival John Edwards suggested it was an example of Clinton setting her positions by polls. "Apparently, new polling data seems to have pressured the Clinton campaign to throw out the baby bond with the bathwater," said Edwards spokesman Chris Kofinis.
Clinton's campaign said that for every $7 million estate that gets taxed, at least 5,000 families would receive the matching funds."(snip)
In other words, this is to be a new 'targeted' tax credit for low income Americans earning up to $30,000 per year ($60k married couple) ... a de-facto $1000 direct dollar for dollar annual 'contribution' by the federal gov't to their personal retirement accounts. Put another way, if they pony up $1000 of their own money into a retirement fund the US gov't hands them $1000 to replace it ... a.k.a. 'free money' !!!
This is also a partial tax credit for quasi-low income Americans earning up to $50,000 per year ($100k married couple) ... a defacto $500 direct dollar for dollar annual 'contribution' to their personal retirement accounts. But Americans earning more than $50k per year ($100k married couple) would receive NO gov't retirement fund contribution from the gov't.
The funding mechanism for this new program is supposed to be an estate tax on families with net worths of $7 million or more. Of course, these days that includes just about every successful family business / family farms etc. ... where the death of a principal may force the sale of that family business / family farm unless the heirs can cough up a couple of million bucks to cover the 'death tax'. Of course the 'very rich' will still beat this tax in the future in the same way that they beat it in the past ... trusts, shifting assets offshore, investing in tax favored industries (i.e. ethanol, wind farms etc.) to receive tax credits that will offset the 'death tax' etc.
Where do you think that the revenues will come from to fund this program once the 'very rich' change their economic behavior to minimize their estate tax liability ? Ahhh, some of you guessed correctly ... increased income taxes on those earning more than $50k ($100k married couple) per year ! If you are a full time dancer, this means YOU !!! It also means your better customers as well !
But look at the bright side ... at least somebody talked some sense into Hilary to give up on the 'baby bond' proposal ! The reason probably was related to the fact that people earning more than $50k ($100k married couple) a year ALSO have babies !!!
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