Pawlenty tells Blitzer Obama to raise taxes on 401 (k)s

[eleny]

He told Blitzer this just now on CNN. McCain has said that this would affect "policemen, firemen, nurses". It would affect my hubby and I greatly down the road *if* it were true as McCain implies.

However, I found this article that explains it more fully.
http://www.politifact.com/truth-o-meter/statements/453/

"But McCain's assertion about whom capital gains taxes would affect is another story. He says they would affect "mutual funds and 401(k)s." He's right on mutual funds, but not about 401(k) or mutual funds held under a 401(k) retirement plan. A 401(k) is a retirement account to which workers can contribute earnings without paying taxes on the earnings. People aren't taxed on their 401(k) accounts until they withdraw the money. When they do withdraw that money, it's subject to regular income taxes, not capital gains taxes.

McCain's comments imply that 100-million people would see higher tax bills due to capital gains increases. This significantly inflates the number of people who pay capital gains taxes, even at the lower rate. Eric Toder, a tax policy expert with the Urban Institute in Washington, D.C., pointed us to IRS data that show about 16.2-million taxpayers were subject to capital gains taxes in 2005, the most recent year for which data are available. Additionally, most of the gains reported in 2005 — about 81 percent — were claimed by taxpayers making $200,000 a year or more, the top 2.7 percent of tax returns. We don't think of them as "policemen, firemen, nurses."

So McCain is right on Obama's position, but he takes a lot of liberties in explaining the potential effects of an increase in the capital gains tax rate. Capital gains tax increases would not directly affect most working people saving for retirement. We find his statement to be Half True."

[backwoodsbob]

1. why let facts

get in the way of a good talking point :sarcasm:

[eleny]

3. It's easy to get confused with the terminology

I hope that some plain talk ads will clarify some of these type of issues during the campaign. I remember how hubby and I make deep sacrifices to put away money for our old age. We aren't alone. So this kind of lie had me jumping to research it immediately.

[Cha]

2. Then Obama will have to explain away mccain's

lies on his Fact Checker site and on the tube.

[eleny]

5. Thanks - I'm at the site searching for how to submit a suggestion

I see that we can forward smear emails to them. Maybe I'll use that link. Thanks for the reminder zidzi!
http://factcheck.barackobama.com/

[speedoo]

4. This lie is easily refuted.

The taxation of 401k's is well understood by all investment professsionals, CPA's, investment firms like Fidelity, etc. etc.

McCain's supporters are stupid to promote this particular lie.

Blitzer obviously should have refuted it himself, but he's useless.

[eleny]

6. Well, I'm not an economic professional nor am I stupid

But it scared the crap out of me when he said it.

[speedoo]

9. I understand that completely.

I was not asserting that "non-professionals" like you are well aware of this. Taxes are very complicated and politicians are among the most responsible for the general confusion of regular folks on economic and financial matters in general. I would love to see a law passed that criminalizes this kind of behavior by politicians, because if there were a better understanding of things like this by more Americans, our economic problems could be more easily corrected.

[eleny]

14. And plan managers weren't allowed to give advice

When we signed up for our plans, no advice was permitted. You had to sort through all of it on your own or hire someone on the side. Hubby and I were public employees and that's how the plan was. We were on our own. So we kept track of what was going on and did our best to save ourselves when the crash hit.

Without going into details I'll just say that being vigilant, thinking ahead, studying and making some quick decisions saved us from disaster and great loss. Yes, we need laws. Reminds me of an old cartoon from my youth Al Fagaly's "There oughta be a law". That oughta be resurrected.

[flpoljunkie]

7. And, Wolf let him get away with it. He's either ignorant or complicit in selling this lie.

[Cha]

12. wolf's a waterboy for the corporatemasters..

nothing more.

[Zynx]

8. The whole 401k system has been an abject failure in its goal anyway.

Most people's balances aren't sufficient for retirement and they don't have pensions anymore either.

[speedoo]

10. It's not the system that failed.

It's a failure of education about how people can use 401k's to accumulate financial assets for retirement.

[Zynx]

20. The problem is that people on average incomes, typically speaking, cannot afford to

put in the proper money to achieve the critical mass necessary for a 401k to be meaningful.

[speedoo]

21. I don't accept that.

People on average incomes can afford to save something every month. Even if they have to sacrifice some nonessential spending. If they start early enough, and use appropriate asset allocation they can accumulate very significant assets.

And as their income grows, they can increase their savings, instead of automatically spending more.

[eleny]

13. We looked at the 401k as a supplement to our retirment

We've let it sit where it is until we reach the age when we must take it or when we need it perhaps for an emergency. So far, we've been lucky and it's been a good thing for us.

As a supplement it's not a failure. When it was sold to Americans during the Reagan administration it wasn't sold as being a full retirement. And it saved us lots of taxes as we were contributing to it.

That bad side of the system was how some plans didn't have a safe haven option. A straight savings account where you could park the fund during bad times for stocks or bonds. That's how so many people lost their shirts. My plan had that safe haven option and it saved us. I believe that not having safe havens was a clever and evil deception.

[mrreowwr_kittty]

16. And if you started yours in the 80s, you made out taxwise.

You put money away, tax free, at a time when taxes were higher than they are now. If you are taking distribution now, you are getting your money out at an historically low tax rate.

For us Gen Xers and younger, the opposite situation is likely. We are putting money away at a low tax rate, and will probably end up paying much higher taxes in the future because of all the debt this country is in. :(

[eleny]

17. We paid pretty high taxes in the 90s, though

Even with the tax free contributions to the 401(k)s. Two salaries/no kids. It was a real bite but then the country paid down its debt. Then along came W. :(

[mrreowwr_kittty]

15. Not to mention all the people raiding them right now to pay their bills.

We need to hold onto Social Security like our lives depend on it. Because, quite frankly, they do. :scared:

[eleny]

18. I agree

I can't even begin to imagine life with more Republican rule.

[mrreowwr_kittty]

11. What's really bad is when I hear my DEM Congresscritter repeating this lie

He cosponsored a bill with Chris Shays to reduce capital gains. It's understandable since this is a district with a lot of Rs and wealthy people (Scottsdale, AZ area) but he either doesn't know, or is deliberately obfuscating, the fact that 401ks and IRAs are not taxed as capital gains. He mentions how important it is to lower capital gains because of all us middle class folks with our 401ks and IRAs. Drives me nuts. I've pointed it out to him personally and emailed his office several times to get him to stop doing it.

[eleny]

19. Sounds like he's a lying sack of *%@