EDITORIAL: Trump right on 401(k) plans

Oct. 29--We've never been fans of President Donald Trump's sometimes reckless and provocative use of social media, but when he dropped one of his "tweet" bombs in the middle of Republican plans to undermine the 401(k), we cheered.

Republicans launched their trial balloon last week, making it known that they were -- and still are -- considering a $2,400 cap on the amount that working Americans could save pre-tax. They could still put more in their retirement account; they would just be paying taxes up front on everything over $2,400. Right now, workers can pocket $18,000 a year in tax-deferred 401(k) plans, and workers over the age of 50 get the tax break up to $24,000.

"There will be NO change to your 401(k)," Trump tweeted. "This has always been a great and popular middle class tax break that works, and it stays!"

How popular? Up to 55 million American workers have some $5 trillion in their 401(k) accounts.

Trump is right on this issue.

Still, some Republican lawmakers are indicating they won't rule out the possibility of imposing some kind of cap on the amount that can be put away tax-deferred, or other changes to the 401(k) program.

"We think, in tax reform, we can create incentives for Americans to save more and save sooner, which can help them," House Ways and Means Committee Chairman Kevin Brady said this week. "So we are exploring a number of ideas in those areas. ... We are continuing discussions with the president, all focused on saving more, saving sooner."

But we don't understand how removing the tax incentive will encourage people to save more and save earlier; it will, in fact, do the opposite.

Republicans -- and Trump -- want tax cuts, and they're pushing more than $1 trillion so far. But they have to pay for them. We just don't want them offsetting some of these cuts -- including corporate tax cuts -- by punishing the middle class. We've already watched too many companies walk away from any kind of retirement program for their workers. How about giving corporations and businesses additional tax incentives to create retirement programs for their workers?

We like the idea of cutting and simplifying taxes, reducing the number of tax brackets and doubling the standard deduction, convinced that the latter will help many of us, but we're taking a wait-and-see attitude on whether this overall effort will help average American workers or hurt them. The 401(k) will be a big part of that final picture.

___

(c)2017 The Joplin Globe (Joplin, Mo.)

Visit The Joplin Globe (Joplin, Mo.) at www.joplinglobe.com

Distributed by Tribune Content Agency, LLC.