Joe Biden’s proposal to eliminate the Mega Roth, and other IRA options, is an attack on the huge portion of middle class families and millennials who have invested heavily in private retirement savings for later in life and now face the prospect of an increasingly insecure retirement, double taxation – and losses.
Here’s the facts Joe Biden doesn’t want you to know:
Attack on Main Street; Not Wall Street
Changes to the IRA system will have downstream impacts that harm everyday investors. Democrats claim their proposed changes to the rules governing IRAs will close a “loophole” that only benefits the super-rich. This is false. It will slam the door on a much wider portion of the country and put their retirement security at risk. It will hit middle class couples and families, and hit millennial couples especially hard given how it stifles their IRA options and will double-tax the income they set aside for retirement.
Tax Hike on the Middle Class
Joe Biden wants you to believe he is only after the IRAs of the “super-rich” like Peter Thiel, and that in doing this, Congress is forcing the rich to share their wealth with the poor. In actuality, this is a “Tax Hike on the Middle Class.” Joe Biden’s proposal eliminates Roth 401K Conversions for IRAs and employer-sponsored plans for single filers making $400,000 or more, and joint filers making $450,000 or more. This will hit millions of people – not just the rich as Biden claims – and amounts to a double tax on the income you save for your retirement.
Changing Rules in Middle of Game
Changes to the IRA system harms the integrity of and trust in the financial system that savers and investors have relied on. People have worked hard and saved for this money. If Joe Biden’s plan succeeds, it will change the rules in the middle of the game, and people will be less likely to continue saving. People have followed a set of rules that is now changing on them. Biden’s plan will hurt middle-income IRAs held by families and millennials with more audits, higher penalties, and an increasingly insecure retirement. This is fundamentally unfair.
Direct Attack on ‘Robinhood Investors’
More and more young Americans are directly investing in equities for long-term financial security. These ‘Robinhood Investors’ have a keen awareness that without an IRA, there will be no retirement security for them. Joe Biden’s plan will erode IRAs as a safe haven for this new investor class, sending a message that IRAs are no longer a safe place to invest.
Undermines Economic & Job Growth
Attacks on IRAs can also have a debilitating impact on economic investment and job growth with many Americans leveraging savings from their IRA to start new job-creating ventures. For example, Congressional Democrats’ proposed 10 percent threshold rule will harm average farmers, landowners and small business owners. This can have economy-wide impacts – stifling growth and future productivity if that means less money available for businesses to invest and expand. When our tax and saving decisions become punitive, we lose sight of our entrepreneurial spirit.
Weakens Charitable Giving
America is built on the generosity of others. Tax laws help make this easier, and more widespread. Roth IRAs help accelerate this giving by also providing offsets to taxable income. Joe Biden’s plan will slam the door on this vital channel of resources for a wide range of social welfare programs in the charitable sector.
Policies designed to respond to a single anecdote usually result in bad policy, and attempts by Joe Biden and his Democrat-controlled Congress to prevent Peter Theil from accumulating too much money in a Roth IRA will ultimately serve to reduce savings and undoubtedly complicate the savings decisions of MILLIONS of Americans without a billion dollars in a Roth IRA.