Who is likely to pay the proposed Wall Street Tax?
November 01, 2019 — ARLINGTON, Va.–(BUSINESS WIRE)–In November, Senator Elizabeth Warren (D-Mass) unveiled her plan to pay for “Medicare for All” – and it’s going to come right out of the retirement savings of the Middle Class. Warren, a Democratic presidential aspirant, claims to raise “about $800 billion” over the next ten years by what is called a “small” tax on financial transactions” which would include the hard-earned money set aside in the retirement savings of millions of hard-working Americans.
The proposal includes a 10 basis point financial transaction tax that applies to American workers’ 401k plans. While it claims to have “little to no effect” on most investors, consider:
- American workers will have to work 2-1/2 years longer to make up for the lost retirement savings due to this new tax, according to an analysis by Vanguard.
- A separate report by the Modern Markets Initiative found that this type of tax would siphon off $64,200 over a 40-year lifetime savings in 401(k)s and IRAs – or the equivalent of delaying the average individual’s retirement by two years.
- A third of the over 80 million participants in these plans make less than $50,000.
A ‘Sweeping tax on Investments’
“Contrary to what is being reported, the Warren proposal does, in fact, include a middle-class tax—a middle-class tax on retirement savings,” explained Brian Graff, CEO of the American Retirement Association.
Sadly, Warren is not the first presidential aspirant to seek to pay for their proposals with a sweeping tax on investment transactions with no apparent exception for retirement accounts, as previous proposals have incorporated. Earlier this year U.S. Senator Kamala Harris (D-Calif.) introduced a similar proposal to pay for her “Medicare for All” proposal. Likewise, Senator Bernie Sanders (I-Vt) has co-sponsored the Inclusive Prosperity Act of 2019, which claimed to generate up to $2.4 trillion in “public revenue from wealthy investors” to help pay for a program that would underwrite forgiveness of student loan debt.
“Every week millions of Americans sacrifice to set aside part of their hard-earned pay for retirement, investing those savings to help provide a secure financial future,” Graff notes. “After years of attacking 401(k) plan fees, some now want to charge a fee every time a hard-working American contributes out of their pay into their 401(k). Saving for retirement is hard work. And those in Washington shouldn’t work to make it any harder”.
About the American Retirement Association
The American Retirement Association, based in the Washington, D.C. area, is a non-profit professional organization established to empower retirement plan professionals who are dedicated to building a better retirement for Americans. The American Retirement Association is comprised of five premier retirement industry associations; the American Society of Pension Professionals & Actuaries (ASPPA), the ASPPA College of Pension Actuaries (ACOPA), the National Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA).
For more information, visit www.usaretirement.org.