Washington INsider

Washington INsiderblog

Mark Schoeff Jr. looks at what's really happening on Capitol Hill - and the upshot for advisers.

Romney, Ryan continue to dance around tax plan details

Could retirement-savings tax deferrals land on chopping block?

Sep 10, 2012 @ 2:50 pm

By Mark Schoeff Jr.

GOP presidential nominee Mitt Romney and his running mate, Wisconsin Rep. Paul Ryan, seem determined to avoid talking about details of their tax plan during the fall campaign, creating a vacuum that their opponents are happy to fill with attacks and that retirement-savings advocates can fill with worry.

It's not surprising that the GOP standard bearers used hazy rhetoric during the Republican convention in Tampa, Fla., two weeks ago. When each had the chance to go into more depth during Sunday-morning talks shows on Sept. 9, they stuck to generalities.

On NBC's “Meet the Press,” Mr. Romney tried to assure viewers – and voters – that his goal with a 20% across-the-board tax reduction was not to ease the tax burden on the rich. Instead, he is going to limit the ways they can avoid taxes.

“Well, I can tell you that people at the high end, high income taxpayers, are going to have fewer deductions and exemptions,” Mr. Romney told host David Gregory. “Otherwise, they'd get a tax break. I'm bringing down the rate of taxation, but also bringing down deductions and exemptions at the high end so the revenues stay the same, the taxes people pay stay the same.”

His running mate offered a little nuance during his appearance on ABC's “This Week.”

“Now the question is, not necessarily what loopholes go, but who gets them,” Mr. Ryan told host George Stephanopoulous. “High-income earners use most of the loopholes. That means they can shelter their income from taxation. But if you take those loopholes, those tax shelters away from high-income earners, more of their income is subject to taxation. And that allows us to lower tax rates on everybody -- small businesses, families, economic growth.”

As the top of the GOP ticket spoke in broad outlines, the Obama campaign jumped into the void.

“Here's what they're hiding from: because there are simply not enough loopholes for the wealthy in the federal budget that Mitt Romney could eliminate to pay for his tax cut, the nonpartisan Tax Policy Center found that his tax plan could only be paid for by limiting popular tax deductions like the mortgage interest deduction, which would raise taxes on the average middle class family with kids by $2,000 a year,” the Obama campaign said in a statement on Sunday.

Retirement-savings tax deferrals also could be on the chopping block. It's a prospect that appeared in late 2010, when the presidential deficit commission suggested significantly curtailing the deferrals to pay for broadening the tax base and lowering rates – a goal of many Republicans and Democrats.

Judy Miller, director of retirement policy at the American Society of Pension Professionals and Actuaries, notes that retirement-savings tax deferrals already are capped at $250,000 of income, and there's a limit on the amount of money that can be put into retirement plans annually.

The lack of specifics in the campaign about whittling tax breaks means talk could encompass retirement savings. The ASPPA is ready to defend that part of the tax code.

"Most Americans save in a workplace plan," Ms. Miller said. "If there's no incentive for a small business owner to put in a plan, we would likely see a decline in the availability of plans."

The issue of retirement security during the campaign has been relegated to political attacks over Medicare rather than a discussion of how to get Americans to save more.

“A lot of people think first about health care,” Christine Marcks, president of Prudential Retirement, told reporters at a Washington meeting on Sept. 6. “It's very, very immediate. Retirement is something that is off in the future.”

Ms. Marcks declined to comment on presidential politics. But she did emphasize a point that many advocates are making to defend the tax breaks for retirement savings – taxes will be paid when retirees draw down their nest eggs.

“In retirement plans, it's a tax deferral,” Ms. Marcks said.

It's unlikely that presidential campaign rhetoric will even get into that level of detail over the next eight weeks. We won't learn much more than we did from the political conventions.

“The theme walking away from the conventions is that there is a tremendous amount of tax uncertainty,” said Bill Lowe, president of Sammons Retirement Solutions Inc.


What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

Apr 30


Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video


Advisers beware: tax law has unintended consequences

Commission accounts could be preferable for some clients, and advisers could be incentivized to move from employee broker-dealers to independent channels.

Recommended Video

Path to growth

Latest news & opinion

Cutting through the red tape of adviser regulation is tricky

Don't expect a simple rollback of rules under the Trump administration in 2018 — instead, regulators are on pace to bolster financial adviser oversight.

Bond investors have more to worry about than a government shutdown

Inflation worries, international rates pushing Treasuries yields higher.

State measures to prevent elder financial abuse gaining steam

A growing number of states are looking to pass rules preventing exploitation of seniors.

Morgan Stanley reports a loss of advisers after exiting the protocol for broker recruiting

The firm said it lost 47 brokers in the fourth quarter, the most in any quarter of 2017.

Morgan Stanley's wealth management fees climb to all-time high

Improvement reflect firm's shift of more clients into fee-based accounts priced on asset levels, which boosts results as markets rise.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print