Under the pretext of combating the financial crisis, Democrats in Congress have been conducting hearings on proposals to confiscate private retirement accounts and turn them into government-controlled accounts managed by the Social Security Administration, by implementing a new tax in the guise of mandatory savings scheme.
The GRAs would be enforced by means of a mandatory savings tax equating to 5 per cent of an individual’s annual paycheck deposited to the GRA. Social Security and Medicare taxes would still be payable, employers would no longer would be able to write off their contributions and capital gains would be taxable year-on-year. In addition, workers could bequeath only half of their account balances to their heirs, unlike full balances from existing 401(k) and IRA accounts.
Justifying government intervention, Ghilarducci cited a 2004 HSBC global survey in claiming, “a third of Americans wanted the government to force them to save more for retirement.” In actual fact, the survey concluded that Americans wanted the government to “enforce additional private savings,” a vastly different meaning than mandatory government-run savings, as Karen McMahan points out.
