Middle-class American retirements are being targeted to pay for another political promise – the latest a “Medicare for All” proposal from U.S. Senator Kamala Harris.
Harris, a Democratic presidential aspirant, claims to raise “well over $2 trillion” over a 10-year period to pay for her proposal through a couple of measures, including a financial transactions tax on stock and bond trading, which – though it’s described as directed at “investors and big banks” – would also include the “investors” called American retirement savers and the hard-earned money set aside in their 401(k), IRAs, and pensions.
“American workers aren’t day-traders”, explains Brian Graff, CEO of the American Retirement Association. “At a time when lawmakers claim to be so concerned about retirement income adequacy and the impact of 401(k) fees, it’s stunning that some would attack the retirement savings of hard-working Americans.
Nor is Harris the first presidential aspirant to seek to pay for their proposals with a sweeping tax on investment transactions with no apparent exception for retirement accounts. Earlier this year U.S. Senator Bernie Sanders (I-Vt) co-sponsored the Inclusive Prosperity Act of 2019, which claimed to generate up to $2.4 trillion in “public revenue from wealthy investors” to help pay for a program that would underwrite forgiveness of student loan debt. Senator Kristen Gillibrand (D-NY) was a co-sponsor of the Wall Street Tax Act, which purports to raise some $755 billion over a decade to help pay for infrastructure improvements – again by including the stocks and bonds held within the trillions of dollars of retirement savings invested every pay day in mutual funds and collective investment trusts by pensions and 401(k)s by Middle-Income Americans.
How much difference could it make in retirement savings? Based on a 2015 report by the Obama Administration’s Council of Economic Advisors on the impact of 401(k) fees, these kind of taxes could reduce an American’s retirement savings by as much as 3% over their working life.