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08.15 RIDE FOR THE OVERRIDE

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09.28 Life is richer when we talk to strangers

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Health Care & Environment

10.01 Lead contamination in LA housing project only one part of pollution puzzle

10.01 United Nations close to landmark deal to curb airplane emissions

10.01 Bees added to US endangered species list for the first time

09.30 Child Care Is Finally Getting Some Much-Needed Regulation, But It’s Still Expensive As Hell

09.30 Point of No Return: Earth Reaches 400ppm Threshold Permanently

09.30 The Streetcar Can't Save Your City

09.30 Flint Wins Funding in the Latest Congressional Budget Standoff [thanks, Democrats!]

09.30 Peak salt: is the desalination dream over for the Gulf states? [so pour the brine in the desert where it won't contaminate aquifers...]

09.30 World Bank to name and shame countries that fail their stunted children

09.29 Paris mayor heralds ‘reconquest of Seine’ as riverbank traffic banned

09.29 Mini-nuclear reactors could be operating in the UK by 2030 - report

09.28 Earth 'Locked Into' Hitting Temperatures Not Seen in 2 Million Years: Study

09.28 South Australia storms: entire state left without power after wild weather – live

09.28 New York City accelerates emissions efforts in face of daunting sea level rise

09.28 Lots to lose: how cities around the world are eliminating car parks

09.28 No fracking, drilling or digging: it’s the only way to save life on Earth

09.28 Greenland's receding icecap to expose top-secret US nuclear project

News Media Matters

10.01 WikiLeaks Founder Julian Assange: 'We Believe in What We're Doing'

09.28 Lester Holt Asks Zero Questions About Poverty, Abortion, Climate Change

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

10.01 The Trump Files: How Donald Made a Fortune by Dumping His Debt on Other People [LIVING LARGE IMMORALLY]

10.01 Trump Infrastructure Plan’s Fatal Flaw

09.30 Nation Ready to Finally End 'Detrimental and Deeply Unjust' Hyde Amendment

09.30 Undermining Democracy, Corporations Pouring Millions into Local Ballot Fights

09.29 Baltimore vs. Marilyn Mosby

09.29 Bye bye, Cable Guy: New FCC rules will make it easier to toss the cable box and cut the cord

09.29 'Trump's promises are empty': energy experts lay waste to proposals

09.29 The silence of the lambs: Why sheepish GOP leaders have been conspicuously quiet since Donald Trump’s debate debacle

09.29 Congress Avoids a Pre-Election Shutdown [another kick of the ugly can down the road]

Justice Matters

10.01 California passes mandatory sentences for sexual assault after Stanford scandal

09.30 Should Prison Really Be the American Way?

09.29 California treasurer imposes year-long ban on working with Wells Fargo

09.29 Wells Fargo Announces $60 Million Clawbacks, But No 'Real Accountability'

09.28 Wells Fargo executives forfeit millions, CEO to forgo salary amid investigation

High Crimes?

10.01 Aleppo hospital hit by barrel bombs and cluster bombs, reports say [to stop the increasingly senseless slaughter for worth-less fossil fuels, can't we expedite arrests (or executions) for War Crimes?]

09.30 Groups Slam Republican AGs Big Oil Collusion to Protect ExxonMobil

09.30 Rodrigo Duterte vows to kill 3 million drug addicts and likens himself to Hitler [0:40video]

09.29 MH17: Buk missile finding sets Russia and west at loggerheads [videos]

09.29 Vladimir Putin’s Outlaw State

09.29 Children bear brunt of alleged chemical weapon attacks in Sudan, says Amnesty

09.29 Two Aleppo hospitals bombed out of service in 'catastrophic' airstrikes

09.28 Amnesty calls off launch of Thai torture report after police warning [something sick is brewing here]

Economics, Crony Capitalism

10.01 Jail Wells Fargo CEO and Chairman John Stumpf!

10.01 TTP & TTIP: Map Shows How Trade Deals Would Enable 'Polluter Power-Grab'

International

10.01 Secret Meetings with Campaign: Germany Prepares for Possible President Trump

10.01 Development Aid: Bringing Light to the Darkness

10.01 UN Condemns US Drone Strike in Afghanistan That Killed 15 Civilians

10.01 Syria conflict: US says Russia driving rebels into extremists' camp

10.01 India is being ruled by a Hindu Taliban

09.28 Killing People, Breaking Things, and America's Winless Wars [war profiteers rake in huge profits, but countries never “win” wars]

09.28 Syrian troops launch ground offensive against Aleppo rebels [video of devastation; will there be profit from fossil fuel we cannot use?]

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  Print view: IRA Sweet Spot Could Lift America
FISCAL ANALYSIS:

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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