Assuming that a tax is applied to any gains over the initial investments (yours and your employers), what is the maximum tax you would be willing to pay on those earnings?
Assuming its not ROTH?
I'm dumbing the issue way, way down, I believe. I guess I should have called it "retirement investment" to simplify it. Let's just say you have a retirement fund that you and your employer contribute to, which is set up to gain interest or earnings over time. If those earnings are taxed, what rate is acceptable for you?
oops, misunderstood.....they should not be taxed until they are withdrawn.
We're assuming that isn't how it works, but instead are taxed yearly, just like income.
I would not oppose a deferred tax on realized earnings, when we actually were able to pull our money, if we also got tax credit on our losses as they occurred.
My 401k investments are just now returning to where they were prior to the crash. Should I get some sort of loss write off for this time period?
I can't pull my money out now without a 10% penalty and a 20% tax. So, we really have no alternative but to let it ride.
Since I am aware of no loss credits, there should neither be any gain tax. One without the other is not even close to fair, IMO.
We're assuming that isn't how it works, but instead are taxed yearly, just like income.
the whole point of a 401 was to encourage employees to save. it took the place of pensions that companies USED to offer. we put the money in pretax, when we withdraw it, it's taxed, at a lower marginal rate, ideally, because at that point we have less income. how could you even begin to keep track of gains and losses to tax them? hell, i move money around all the time.
We're assuming that isn't how it works, but instead are taxed yearly, just like income.
I'm dumbing the issue way, way down, I believe. I guess I should have called it "retirement investment" to simplify it. Let's just say you have a retirement fund that you and your employer contribute to, which is set up to gain interest or earnings over time. If those earnings are taxed, what rate is acceptable for you?
We're assuming that isn't how it works, but instead are taxed yearly, just like income.
Assuming that a tax is applied to any gains over the initial investments (yours and your employers), what is the maximum tax you would be willing to pay on those earnings?
I like that..interesting perspective.
Okay, stick with your premise. How much are you will to pay on the total accrued when you withdraw?
We're assuming that isn't how it works, but instead are taxed yearly, just like income.
we desperately need people to start saving for retirement. I can think of fewer ways to discourage them from doing so than to start taxing it. In reality, we should make contributions and earnings tax-free.
Investment income should be taxed exactly like any other income. There should not be special strokes for special folks.
That said, I do think that investments should be adjusted for inflation. Many times peoples investments have gone up, but not actually realized a profit after inflation. So inflation should be accounted for.
Isn't that social engineering? I thought that conservatives were against that.
We desperately need people to stop being fat, so do you think we should have a discount tax rate for people who are not fat?
is it social engineering? eh. it's an invitation, not a coercive measure - i would draw a distinction between the two. and i think that the obesity crises is nowhere near the savings (or lack thereof) crises. you could just as easily argue that any tax measure the government makes is "social engineering". if it is, this strikes me as a minimalist and particularly wise one, as it only encourages responsible behavior, without punishing irresponsibility or shifting the cost to others.
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