The GOP Tax Reform Proposal is a Good One. But Leave 401(K) Plans Alone.

I am one of the people regularly and highly critical of the GOP. There are a number of things I wish they would improve in this tax plan, including lowering the top rate. But based on what has been released of the plan and the compromises thus far, this is a good step in the right direction.

he Republican Party will not privatize social security plans, but is considering cutting the amount people can place in 401(K) plans. It is not a good idea and disincentivize saving for retirement. I have seen some on the left note that few can actually contribute the maximum. But the reality is we should want all those who can to save as much as they can now. Yes, they will probably be in a lower tax rate later in life, but we should want people saving as much as they can with every incentive to do so. Just because some cannot, does not mean we should punish those who can.

With the exception of this, the GOP’s tax framework is good. While I will personally be hurt by an inability to deduct my state taxes, I think it is a sound idea. People in high tax states are allowed the luxury of not realizing it because they get that deduction. Governor Cuomo of New York is already lamenting how unfair it would be to the people of New York, but the reality is the people of New York would actually hold people like Cuomo accountable for tax reform if they knew how much they were taxed.

I am one of the people regularly and highly critical of the GOP. There are a number of things I wish they would improve in this tax plan, including lowering the top rate. But based on what has been released of the plan and the compromises thus far, this is a good step in the right direction and we should always want the tax code advancing in the right direction.

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