August 13, 2013

Tuesday Tax Tradeoff: Help Seniors Get Social Security OR Lower Taxes for Multimillionaires

By William Rice, Policy Consultant, Americans for Tax Fairness

During the 2012 election, we learned that presidential candidate Mitt Romney had accumulated over $100 million in his tax-favored retirement account. He was able to do this because of a provision in the tax code that encourages middle-class families to save money for retirement in IRA and 401(k) accounts. But some very wealthy individuals are using these retirement accounts to tax shelter tens of millions of dollars. Annual Tax Break: $388 million. (p. 8)

Meanwhile, the Social Security Administration (SSA) has been forced to cut its budget. SSA will handle 5 million new applications for retirement benefits this year, and administer payments for more than 60 million Americans. But the across-the-board federal budget cuts, known as the “sequester,” have forced the agency to close offices and limit hours, forcing seniors to wait in long lines or experience significant delays in receiving needed benefits. 2013 Budget Cut: $286 million. (p. 60, supra note 3)

Which would you choose: A gaping tax loophole for the very wealthy to have a cushy retirement, or sufficient funding to process Social Security benefits for seniors and people with disabilities?