Question: Should Congress reduce the deductibility of 401(k) retirement savings to make room for tax-rate cuts?
Bob’s Answer NO: While it might be argued that the growth spurred by upper-bracket tax cuts is worth reducing the amount Americans can save in their 401(k) accounts, it would be a bad idea. To accomplish any real reform, lawmakers will have to make hard decisions. In states where people use the deduction heavily, such as New York and California, resistance will be the strongest and alternatives to reducing the deductibility of 401(k) savings must be found.
To read the other EconoMeter panelists’ answers to this weeks question click here.