finally a bush proposal i agree with.

[Mr.Kitchen]

www.lifetimesavingsaccount.com/

you can got there for a description from some fairly enthusiactic supportors of the idea.

I like the plan because it is simple and encourages people to save thier money rather than waste it.

From what i have been able to find out in essentially a quick overview it is like an IRA only there are no penalties for withdrawing your money.

Jeremy

Anyone out there who doesn't like the idea? if so why?

 

[Diezel]

I liked this one:

The flexibility of Lifetime Savings Accounts may result in people spending money on the wrong things

Another variant of this argument is that people may decide to save with Lifetime Savings Accounts rather than in the more restrictive retirements accounts and that that is a bad thing. Or as Tami Luhby stated in Newsday: it’s elements of the proposal's flexibility, particularly the lack of penalties for withdrawing funds from the Lifetime Savings Accounts, that concerns most of the critics. This "government as nanny" approach is astounding in its demeaning way of looking at American citizens. It says that tax-advantaged savings is not a good idea unless it is savings for a purpose that someone else (i.e., liberals?) thinks is for a good purpose. According to some, freedom of choice is apparently not a good concept when it comes to one’s own financial affairs.

I'd hate to give people the freedom to choose what they do with their own money! It seems to make the hair stand up on the back of my neck when I hear people talk like that. I just don't understand what right someone thinks they have to tell me what a good use of my money is. If I want to blow my retirement account on hookers and drugs, that's my choice.

 

[toddjh]

I'd hate to give people the freedom to choose what they do with their own money!

Just to play devils' advocate, I think that's a bit unfair. It's not about what you're allowed to do with your money, it's about what types of things the government should give you a tax break for. If you wanted to blow your money on hookers and drugs, you could just take it out of your paycheck and pay taxes on it like usual. If you want special treatment from the government, it's not unreasonable for them to set down guidelines for it.

If it's the entire concept of income tax in general that you object to, then your problem isn't with tax-deferred plans in particular, right?

It seems to make the hair stand up on the back of my neck when I hear people talk like that. I just don't understand what right someone thinks they have to tell me what a good use of my money is. If I want to blow my retirement account on hookers and drugs, that's my choice.

It makes a certain sort of sense from the liberal point of view. If they support government welfare programs, then the money's going to come out of their pockets if people haven't saved enough for retirement. Thus, it makes sense to encourage everyone to save their own money rather than spending it.

Jeremy

 

[Diezel]

Just to play devils' advocate, I think that's a bit unfair. It's not about what you're allowed to do with your money, it's about what types of things the government should give you a tax break for. If you wanted to blow your money on hookers and drugs, you could just take it out of your paycheck and pay taxes on it like usual. If you want special treatment from the government, it's not unreasonable for them to set down guidelines for it.

If it's the entire concept of income tax in general that you object to, then your problem isn't with tax-deferred plans in particular, right?

Fair, but if that is the sole purpose. But if I understand it correctly, this is not a "retirement account", it is a way for the government to get people to save. What they save for should be their own business.

For the most part, I have little problem with income tax as a theory. In practice, I think it is not implemented well and I also think there are better ways of doing the same.

It makes a certain sort of sense from the liberal point of view. If they support government welfare programs, then the money's going to come out of their pockets if people haven't saved enough for retirement. Thus, it makes sense to encourage everyone to save their own money rather than spending it.

Jeremy

Sure, but if you object to having to "save" people that didn't save in the first place, then you don't care what they spend it on, like me.

 

[peptoabysmal]

One word.

Sweet!

 

[shuize]

I like the idea.

My savings would certainly increase. But I'm not convinced the government would ever be inclined to cut spending to cover any shortfall in revenue (taxes) as the Q&A page suggests.

More savings has got to be good for the economy in the long run, though. How much, I'll leave to the economists to argue about.

 

[The Don]

Fair, but if that is the sole purpose. But if I understand it correctly, this is not a "retirement account", it is a way for the government to get people to save. What they save for should be their own business.me.

What they're trying to avoid is the politically uncomfortable picture in 30yrs time of people who have blown their savings on hookers being very poor seniors. There would be an outcry and social security would have to pick up the slack at a time when there may be fewer people of working age.

The "hooker enjoyers" could either become a vociferous underclass in retirement (if they get the money from government) or a source of irritation for people like myself who have saved for retirement since age 21 but who will then have to be means tested and will only get about 5c more per month than them.

So stop being such a selfish b@$t@rd and save for your retirement (being of course careful not to trigger a recession by cutting back on your spending)

 

[The Don]

I like the idea.

My savings would certainly increase. But I'm not convinced the government would ever be inclined to cut spending to cover any shortfall in revenue (taxes) as the Q&A page suggests.

The shortfall in taxes is likely to be quite small. IN the UK we introduced a variety of flexible tax-efficient savings mechanisms. The results were predictable....

The rich didn't use them because their accountants already had tax efficient savings vehicles for them

The poor didn't use them because they don't have any spare money

So it can down to the middle classes as the only customers, but of course they're too busy taking out enormous home loans, buying Volvos and shopping at Ikea to bother.

There has to be cheaper ways to by votes adn more effective ways of deploying savings. For example, in the UK, your whole retirement savings (private pension) fund currently has to go toward buying an annuity. These things are rip-offs because if you die on day 1, the insurance co. gets to keep all the money. What a disincentive to save.

When I take over the world I will insist that a proportion of the fund has to be placed in an annuity, enough to generate a minimum income. The balance can be used for whatever reason you want

 

[Ladewig]

It's fine by me. I think it might be simpler just to say that the first x hundred dollars of interest income is tax exempt and then argue about what x should be.

I am a bit surprised that Bush didn't work dividend income into the picture.