SVG
Commentary
Wall Street Journal

Whom Should the Secure Act Make Securer?

Retirement accounts were created with preferred tax treatment to provide resources to workers for their own retirement, not for the purpose of funding vacations or general expenses for beneficiaries.

christopher_demuth
christopher_demuth
Former Distinguished Fellow

My brother Philip DeMuth’s brilliant exposé of the Secure Act (Congress Is Coming for Your IRA, op-ed, July 10) points to two further problems. The act would be a major defeat for the effort to shift from taxing income to taxing consumption. That shift would leave citizens free to build personal and family wealth over time; their investment earnings, like their personal earnings, would be taxed when and only when spent on immediate consumption. Such a revenue system would be much fairer and radically simpler than the one we have. It would be a substantial boost for both economic growth and actual security for individuals and families.

The various provisions in the tax code that temporarily shield savings from income taxation are beachheads in the direction of a consumption tax. They should be expanded and liberalized, and the necessities for revenue raising focused on broadening the tax rates on income that is consumed. Instead, the Secure Act reneges on savings provisions that millions of Americans have relied on. That will lead citizens to distrust the savings inducements Congress chooses to leave in the code for now.

The act is part of a broader effort to expand political control over private saving and investment. It aligns with proposals to expand Social Security and subject its benefits to additional mandates and regulations, and to establish state retirement-investment exchanges on the model of the ObamaCare health-insurance exchanges. The common theme is to make personal financial security increasingly a matter of government dispensation on the government’s terms.

The Secure Act’s restrictions on inheritance show where this leads: to directing voters’ attentions to their immediate personal needs rather than the needs of posterity, and to further undermining the already-beleaguered American family.

Read the full article in the Wall Street Journal "here":https://www.wsj.com/articles/whom-should-the-secure-act-make-securer-11…