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Health Care & Environment

10.25 Stand Up to Big Pharma Greed. Vote Yes on Proposition 61

10.25 Report Shows 'Bold New Vision' for Carbon-Free Transportation System Is Possible

10.25 Antibiotic waste is polluting India and China's rivers; big pharma must act

10.25 Renewables made up half of net electricity capacity added last year

10.25 Standing Rock: Police Arrest 120+ Water Protectors as Dakota Access Speeds Up Pipeline Construction [11:00 video]

10.25 Actor Shailene Woodley on Her Arrest, Strip Search and Dakota Access Pipeline Resistance [10:00 video]

10.24 Inside big pharma's fight to block recreational marijuana

10.24 We sent a vegetarian to see if meatless burgers can convert carnivores

10.23 Dear Donald Trump: I'm an OB-GYN. There are no 9-month abortions.

10.23 China’s Wind Co. Profits, share price soar by 60%: 2 Turbines an Hour being Installed

10.23 The world’s first tidal energy farm could power 175,000 homes [similar project is underway in the Bay of Fundy]

10.22 Law to cut sex-selective abortions in Armenia 'putting lives at risk'

10.22 US energy shakeup continues as solar capacity set to triple

10.22 A three-bed house with £500 energy bills? How you too can slash your costs

10.22 Highlighting Damage of Lack of Clinic Funding, CDC Says STDs at All-Time High

10.22 Three Massive Mergers—Millions for One Bank and a Disaster for Food, Water, and Climate

News Media Matters

10.23 The Crackdown on Dakota Access Pipeline Reporters Shows the Vital Role of Independent Media

10.23 How media outlets from around the world are reacting to the presidential campaign

10.22 Documentary film-makers face decades in prison for taping oil pipeline protests

Daily: FAIR Blog
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US Politics, Policy & 'Culture'

10.25 Free to Plunder: The Case Against Gary Johnson and Libertarianism

10.25 This Atlas of Racial Equity Just Keeps Getting Better [map graphics]

10.25 Elizabeth Warren: 'nasty women' will defeat Trump on election day [videos]

10.23 AIR TRUMP: A SHORT PLAY [parody]


10.22 The Huge Corporate Tax Cut Hillary Clinton Doesn’t Talk About [is double-taxation on foreign income normal or out of step?]

10.22 Bernie Looks Ahead

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10.25 Chris Christie Is Over

10.25 Officer who shot Samuel DuBose faces murder trial as city braces for protests [4:51 video]

10.24 Police and hired assassins are killing land rights defenders. Let's end this violence

10.24 Tunisian coalition party fights for women's rights with gender violence bill

10.22 Senators Want to Know: Who's Actually Being Held Accountable at Wells Fargo?


10.20 Mass incarceration in America, explained in 22 maps and charts

High Crimes?

10.25 Islamic State atrocities reported around Mosul, says UN

10.24 Philippines senator calls for Duterte to face crimes against humanity inquiry

Economics, Crony Capitalism

10.25 Already an Oligarchy: Corporate Dominance Negates Democracy

10.24 How Democrats Killed Their Populist Soul

10.24 Elizabeth Warren Warns Democrats Not To Cave On Corporate Tax Reform

10.23 Super-size my superyacht: the quest for bigger boats and gadgets



10.25 Study says 850,000 UK public sector jobs could be automated by 2030

10.25 Quetta attack: Pakistan reels as more than 50 die in assault on police academy

10.24 The Turks want Mosul and Aleppo "back."

10.24 Diary

10.24 Young, female and determined: how millennial social entrepreneurs are changing the world

10.24 Q&A: what happens now to the Calais refugees?

10.23 America, land of opportunity? Not for young people, study says

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  Print view: IRA Sweet Spot Could Lift America

IRA Sweet Spot Could Lift America

by Gerald E. Scorse
The boomers’ decades of tax deferral are ending, and decades of minimum required distributions are about to begin.

Congress realizes that Medicare and Social Security lie directly in the path of a demographic tsunami. The first wave of baby boomers has already filed for benefits, and alarm bells are sounding on the Potomac.

But a little-noticed fiscal windfall kicks in just ahead. Starting in 2016, untold tax dollars will come streaming into the Treasury as boomers begin taking minimum required distributions (MRDs) from their retirement accounts. Legislators should speed up the distributions, and dedicate the proceeds to shoring up America’s safety net.

The inflow traces back to the 1974 Congressional act that set up individual retirement accounts (IRAs). Numerous offshoots have been added, such as 401(k)s and 403(b)s, but the essentials remain what they were at the start. Contributions are tax-free and gains are tax-deferred. Withdrawals can begin at age 59½; they must begin at age 70½ and continue every year thereafter. Withdrawals, including capital gains, are taxed at ordinary income rates. (Roth IRAs, which have different rules, don’t figure in here.)

The creation of IRAs was a political tour de force that served high social purpose, made economic sense, and appealed to separate self-interests. Through IRAs, the federal government offered millions of American workers their best chance ever to put away some money for the Golden Years. It was money that would let them live a little, not just get by on Social Security. What the government gave up in tax concessions, it could recoup on the other end: a continuous influx of extra revenue, topping off the glow of having done right by the country.

Corporate America cheered for its own reasons. Companies with defined-benefit pension plans quickly realized that defined-contribution IRAs gave them a less expensive way to offer a substitute benefit. Companies lacking pensions suddenly had a retirement plan as well, and it included the allure of potential stock market riches. Wall Street saw green. IRAs promised millions of new customers, endlessly handing over new money.

Now the boomers’ decades of tax deferral are ending, and decades of MRDs are about to begin. As usual the devil is the details, and the details will pack real punch once the paybacks start. Here are three revenue-generating MRD proposals:

Set an earlier MRD date. There’s no good reason to start MRDs at age 70½. A meaningful start date would be age 65: when Medicare begins, so should the tax deferral payback. Congress acted a generation ago to protect Social Security by raising the retirement age in stages; today’s Congress should act to help preserve Medicare by lowering the MRD start date, in stages, to age 65.

Adjust withdrawal rates. The starting MRD for most IRAs is less than 3.7 percent. Twenty-five years later, at age 95, it’s just 11.6 percent. Congress should set the first-year MRD at 5% and recalibrate the rates going forward. Uncle Sam, generous all along, has strong grounds to accelerate account payouts. This step could be made progressive by keeping the current rates for balances below, say, $250,000.

Abolish “stretch IRAs”. Several-generation transfers, now permitted, can extend MRDs into the next century. Passing along wealth is fine, but tax-sheltered retirement accounts shouldn’t become tax avoidance tools. Set a two-generation limit, or a date-certain limit, after which balances must be distributed and taxes paid.

The beauty of these ideas is that they raise revenue without raising taxes. They’re a stimulus as well: all the revenue comes from putting more income in taxpayer hands sooner. Money would flow in not only from boomer MRDs, but from all accounts taking minimum payouts.

President Obama has often called for shared sacrifice. Few would find it easier than those with retirement accounts who willingly waive withdrawals until required, and then take only what they must.

Gerald E. Scorse helped pass the bill requiring basis reporting for stock market capital gains. He writes articles on taxes.

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This story was published on December 18, 2012.


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