Progressive advocacy groups and economic analysts on Tuesday denounced retirement savings-related tax changes embedded in Congress’ end-of-year $1.7 trillion spending package, characterizing the pending reforms taken directly from the SECURE 2.0 Act as a “giveaway to the rich.”
According to Patriotic Millionaires, a group of wealthy tax fairness champions, the must-pass omnibus bill includes “some minor provisions to help low-income earners save for retirement, but the vast majority are designed to allow high earners to avoid paying more taxes.”
Morris Pearl, the group’s chair and a former managing director at BlackRock, said: “I’m tired of tax cuts for the rich being sold as help for the poor. The retirement changes in the omnibus package overwhelmingly benefit wealthy people like me while doing almost nothing for the people who truly struggle to save for retirement. This bill does not make it easier for workers to save for retirement, it just makes it easier for high-income earners to shelter more of their earnings from taxes.”
“This law will make my heirs hundreds of thousands of dollars wealthier,” said Pearl. “It will do virtually nothing for the worker who toasted my bagel this morning. This may be good for the children of some rich people, but in the long run, the increased inequality it creates is bad for everyone, including my own family.”
“This legislation is not what America needs to help workers save for retirement,” he added. “Congress should scrap SECURE 2.0 and start from scratch with something that would help all Americans, not just the rich, save for a comfortable, well-deserved retirement. A multibillion dollar tax cut for the rich should not be the last act of a Democratic Congress.”
Pearl was not alone in criticizing the retirement savings-related tax provisions included in the fiscal year 2023 appropriations bill.
Sharon Parrott, president of the Center on Budget and Policy Priorities, said that some of the changes “are laudatory, such as creating a savings match for low-income savers and allowing certain kinds of savings to be tapped for emergency purposes and not just retirement.”
“But others expand existing unnecessary and regressive tax subsidies for people nearing or deep into retirement,” she continued. “For example, affluent people will now be able to wait until age 75 before they are required to touch their tax-favored ‘retirement’ account.”
Parrott added that “it is particularly unfortunate that these tax cuts are in the package while a provision to allow very low-income seniors and people with disabilities to have modest savings and still qualify for income assistance through the Supplemental Security Income program was excluded, despite bipartisan efforts to include it.”
In an email to Common Dreams, the Institute on Taxation and Economic Policy (ITEP) also lamented the omnibus package’s inclusion of bipartisan retirement legislation that “would mainly help the well-off.”
The reforms in question “will exacerbate inequality that is already pervasive in tax benefits for retirement savings,” ITEP warned. “Currently, the wealthiest 40% of taxpayers receive 87% of those benefits.”
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